May 19, 2017
Every lender on the Mortgage Choice panel has a different mortgage insurance premium for your individual scenario. Differences in mortgage insurance premiums and policies are a very important factor when choosing a lender for your loan.
In most cases the entire mortgage insurance premium can be added onto the loan accept when it comes to borrowing 95% of the purchase price as there are only a few lenders that will allow you to add on the full mortgage insurance premium amount.
If you borrowed 95% of the purchase price of your home and added on all the mortgage insurance onto the loan, the total % that you would be borrowing in some cases would be 99.3% of the purchase price.
Not one of the 4 major Australian Banks will add on the entire premium for a 95% loan. They will only do a max of 97% including mortgage insurance which means you will have to pay for some of the insurance out of your own pocket.
Based on a $650,000 purchase and borrowing 95% of the purchase price, the difference in mortgage insurance premiums between 2 of Australia’s major banks is $2,421. The difference between 2 other lenders on the Mortgage Choice panel is $5,097 (also very popular lenders)
By contributing just a little bit more of a deposit and borrowing 88% of the purchase price rather than 90% you could reduce your mortgage insurance premium by $3,635!
Some lenders will charge a higher variable interest rate for mortgage insured loans as they perceive the loan to be a higher risk. What a lot of people don’t know is that fixed rates are generally unchanged irrespective of the % you borrow.
Many borrowers will focus purely on interest rates and ongoing fees and completely neglect the mortgage insurance premium. Please contact us anytime if you ever have any questions what so ever.
Ryan Ewart and Nathan Newham
Mortgage Choice – Hornsby/North Shore/Northern Beaches