Borrowers sometimes assume refinancing is impossible until the loan is below 80% of the property value. That is not always true. Higher-LVR refinancing can be available, but the cost-benefit equation changes because mortgage insurance, pricing or product restrictions may apply.
- Refinancing above 80% LVR can be possible
- A fresh LMI premium may apply
- Valuation outcome is critical
- Existing-lender repricing may be cheaper
- Compare total cost, not just rate
Start with an updated valuation
A property may have risen enough that the current LVR is lower than expected — or a lender valuation may come in below the owner’s estimate. The valuation is therefore the first meaningful step.
Different lenders can produce different valuation outcomes, but valuation shopping should be handled carefully and ethically.
Consider LMI and switching costs
A new lender may require a new LMI premium even if LMI was paid on the original loan. That can overwhelm the interest saving from a lower rate.
In some cases the better strategy is to negotiate with the existing lender until equity improves.
There may be reasons beyond rate
A refinance can still make sense to change loan structure, remove a guarantor, access needed features or move away from an unsuitable lender. The value of the change needs to justify the costs.
Run the full break-even calculation rather than focusing only on the new advertised rate.
Frequently asked questions
Will I pay LMI again when refinancing?
Potentially. LMI generally does not transfer automatically from one lender to another.
Can property growth remove the problem?
Yes. A higher valuation can reduce LVR without requiring principal reduction.
Should I wait until 80% LVR?
Sometimes waiting is sensible, but it depends on rate savings, costs and your reasons for refinancing.