Key Takeaways
- LMI is a one-off premium tied to a specific loan, so it is not refundable or transferable when you refinance to a new lender.
- If your equity now puts you at or below 80%, refinancing means no new premium is payable at all.
- Where you still need to borrow above 80%, eligible accountants can often use the professional waiver to refinance without paying LMI again.
- Refinancing is assessed afresh at the actual rate plus 3 percentage points, so the new loan must stack up on its own merits.
Many accountants who bought with a smaller deposit paid Lenders Mortgage Insurance at the time, and a common question later is whether refinancing can remove that cost or avoid paying it again. With variable rates around the 6% mark and many borrowers reviewing their loans, the refinance question is timely, but the answer involves a quirk of how the insurance works that catches a lot of people out. The short version is that you cannot get a past premium refunded, but refinancing can still help you avoid paying it twice, and the accountant waiver has a role here.
Working out whether a refinance removes or avoids the premium in your case is something a mortgage broker for accountants can assess against your current equity and lender. This article explains how LMI behaves when you refinance, when the accountant waiver applies, the role of equity and your loan-to-value ratio, and when refinancing to remove or avoid LMI actually makes sense.
How LMI Behaves When You Refinance
The key thing to understand is that Lenders Mortgage Insurance (LMI) does not move with you. It is a one-off premium tied to a specific loan with a specific lender, charged when you borrow more than 80% of a property’s value, and it protects that lender. When you refinance to a new lender, the original premium is not refunded and does not carry across, so the new lender treats your application as a fresh loan. Whether you pay LMI again depends entirely on your loan-to-value ratio (LVR) at the time of refinancing, which is why your equity position is the decisive factor.
When Refinancing Removes or Avoids LMI
Whether a refinance saves you the premium comes down to how much equity you now hold and, for accountants, whether the waiver is available. There are a few distinct scenarios.
When Your Equity Has Reached 80%
If your property has grown in value or you have paid down the loan enough that you now owe 80% or less of the current value, refinancing means no LMI is payable, because you are no longer borrowing above the threshold that triggers it. This is the cleanest outcome: the new loan simply sits below 80% and the premium does not apply to anyone.
When You’re Still Above 80%
If you still need to borrow more than 80%, a standard refinance would normally attract a fresh premium with the new lender. This is where being an accountant matters: eligible accountants can often use the professional waiver to refinance above 80% without paying LMI again, provided the lender offers it and you meet the criteria. Many lenders extend the waiver to refinances, not just purchases.
When You’re Releasing Equity
Refinancing to access equity, for example to fund an investment deposit or renovation, can push your LVR back above 80%. Here too, the accountant waiver can allow you to do so without a premium where lender policy permits, which is one of the more useful applications of the waiver for accountants building a portfolio.
The Role of Equity and Your LVR
Because the premium is driven by your LVR, understanding where you sit is the starting point for any refinance decision. Your equity does the heavy lifting.
Your LVR at refinance is your loan amount divided by the current value of the property, so both repayments made and any growth in value work in your favour over time. An accountant who bought a few years ago with a 10% deposit, paid LMI, and has since seen the property appreciate may now sit comfortably below 80%, meaning a refinance carries no premium at all. Someone who is still above 80% has the waiver as the route to avoiding a second premium. Either way, a current valuation is what tells you which situation you are in, and it is worth establishing before assuming a refinance will or will not cost you.
When Refinancing to Remove LMI Makes Sense
Avoiding a second premium is only one part of a refinance decision, so it is worth weighing alongside the other factors rather than in isolation. A refinance should stand up on its overall merits.
Refinancing is assessed afresh, with the new lender testing your ability to service the loan at the actual rate plus a buffer of 3 percentage points set by the Australian Prudential Regulation Authority (APRA), which at current rates means roughly 9%. So a refinance needs to make sense on rate, features, and serviceability, not just on the premium. There can also be costs to switching, such as discharge and establishment fees, which should be set against the saving. For an accountant whose equity now sits below 80%, or who can use the waiver above it, removing or avoiding LMI can be a genuine benefit, but it is strongest when paired with a better rate or loan structure rather than pursued on its own.
Frequently Asked Questions (FAQs)
Can I get my LMI refunded if I refinance?
Generally no. LMI is a one-off premium tied to your original loan, so it is not refunded when you refinance to a new lender, and only limited partial refunds may apply in narrow circumstances soon after settlement with the same insurer. Refinancing avoids paying a new premium where your position allows, rather than recovering the old one.
Does refinancing remove LMI I’ve already paid?
It does not recover what you have paid, but it can mean you do not pay it again. If your equity now puts you at or below 80%, no new premium applies. If you are still above 80%, the accountant waiver may let you refinance without a fresh premium where the lender offers it.
Can accountants use the waiver when refinancing, not just buying?
Often yes. Many lenders extend the professional LMI waiver to refinances as well as purchases, including where you refinance above 80%. As with a purchase, you need to meet the eligibility criteria, hold current professional membership, and request the waiver, and not every lender applies it to refinances.
How do I know if my LVR is below 80%?
Divide your current loan balance by the current value of the property. Both repayments you have made and any increase in the property’s value reduce your LVR over time. A current valuation is the reliable way to confirm where you sit, since an outdated figure can mislead you about whether a premium would apply.
Is it worth refinancing just to avoid LMI?
Avoiding a second premium is a real benefit, but a refinance should also make sense on rate, features, and serviceability, and you should weigh any switching costs such as discharge and establishment fees. Refinancing is strongest when avoiding LMI is one of several reasons, rather than the only one.
Will refinancing be harder because rates have risen?
It can be, because the new lender assesses you at the actual rate plus a 3 percentage point buffer, so your borrowing capacity is tested at around 9%. A refinance that increases your loan, or releases equity, needs to fit within that assessment, which is worth checking before assuming a switch will proceed.
The Bottom Line
Accountants generally cannot have a past LMI premium refunded by refinancing, because it is a one-off cost tied to the original loan, but refinancing can still help them avoid paying it again. Where equity now sits at or below 80% of the current value, no new premium applies; where borrowing remains above 80%, the professional waiver can often let eligible accountants refinance without a fresh premium. Because a refinance is assessed afresh at the actual rate plus 3 percentage points and may carry switching costs, the soundest approach is to treat removing or avoiding LMI as one benefit within a broader decision about rate, structure, and serviceability.