How to use QBE LMI Calculator

How to use QBE LMI Calculator

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Do you have to use the QBE LMI Calculator to check if your loan will incur any premium of Lenders’ Mortgage Insurance or LMI? Do you want to find out how to use it? You may also be not so clear about what LMI is. This blog post will cover all those questions so that you don’t have to make another search to find more information.

Let’s first start with the general question.

What is LMI?

Lenders’ Mortgage Insurance is for lenders to protect themselves against loan borrowers. By charging an extra premium, lenders protect themselves from the potential loss that can occur if borrowers are unable to repay their home loan. Not every loan borrower is required to pay LMI. It is only when a lender concludes that a borrower would impose an increased risk associated with their loan.

The LMI premium is required to be paid upon funding of your loan and is added to your total loan. Basically, you need to have 20% of the value of the property that you want to buy in your bank account to be eligible for a home loan. With LMI, you can reduce the deposit required, which will allow you to buy a home earlier.

It is important to know that LMI is totally different from mortgage protection insurance that protects you as a borrower. LMI is for lenders.

How often do you pay?

If you are required to pay LMI, you will pay only once at the completion of property purchase. Your lender also pays the premium to the insurer once when your property purchase is finished. In addition to LMI, other establishment fees may be charged by your lender.

How much is LMI?

The cost of LMI varies depending on your Loan-to-Value Ratio or LVR. If you have savings in your bank account as much as 20 percent of the house property to be purchased, you do not have to pay LMI. LMI is for those having deposit less than 20 percent of the home value. LMI cost will be different from lenders. It will be also different by big 4 banks and small lenders. The most accurate way will be providing your details to your lender so that you can get the expected LMI cost.

If you first want to know if you will required to pay a LMI cost, use this Servicing Capacity Calculator of QBE. When you google QBE LMI Calcuator, you will also get a link to this calculator. When you click the blue button, “Click here to access the Servicing Capacity Calculator”, you will be prompted to the login page. You can just use the default user name, “public”, and password to pass the login page.

Once you log in, you will be able to see a form you need to fill out to get your serviceability score. Leave Reference Number as blank, and fill out the Loan Details and Applicant Details sections. Once done, press Calculate at the bottom. In the Calculation Results box, you will see a percent and if it’s passed. If it is less than 20 percent, you will have to pay LMI.

LMI Cost Estimation

So, the calculator won’t give you an LMI cost. You can use the table below to get an estimated LMI cost. You can find the original table here.

LVRUp to $300K$300,001 – $500K$500.001 – $600K$600,001 – $750K$750,001 – $1M
80.01 – 81%0.48%0.57%0.90%0.90%0.91%
81.01 – 82%0.49%0.57%0.90%0.90%0.91%
82.01 – 83%0.60%0.70%0.93%1.09%1.11%
83.01 – 84%0.66%0.83%0.96%1.09%1.15%
84.01 – 85%0.73%0.97%1.17%1.33%1.41%
85.01 – 86%0.88%1.08%1.26%1.41%1.46%
86.01 – 87%0.93%1.15%1.41%1.63%1.73%
87.01 – 88%1.06%1.31%1.46%1.63%1.75%
88.01 – 89%1.30%1.62%1.95%2.22%2.40%
89.01 – 90%1.46%1.87%2.18%2.37%2.52%
90.01 – 91%2.01%2.62%3.51%3.78%3.82%
91.01 – 92%2.01%2.67%3.57%3.87%3.93%
92.01 – 93%2.33%3.03%3.80%4.08%4.16%
93.01 – 94%2.38%3.03%3.80%4.29%4.32%
94.01 – 95%2.61%3.35%4.00%4.61%4.60%

The left-most side is LVR and the top columns are loan amount ranges. For example, if you are planning to borrow $300,000 for a house property $350,000, your LVR is 85.7%. You just go to the table and find the matching LMI rate, which, in this case, is 0.88%. Then you can just multiply the LMI rate by your loan amount, $300,000 * 0.0088 = 2,640. So, $2,640 will be your estimated LMI when you want to borrow $300k for the $350k property.

Conclusion

There are pros and cons for using LMI. If you can afford an LMI cost, using LMI may not be a bad choice. Don’t use the table as the final measure for your LMI cost. Contact QBE to get more accurate estimation and to know more about home loan.

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