loan/mortgage repayment via sched xactions: feedback request

Conrad Canterford conrad@mail.watersprite.com.au
05 Jul 2002 11:27:26 +1000


On Fri, 2002-07-05 at 11:09, Olaf Faaland wrote:
> Conrad,
> "Insurance" : Hazard insurance, covering things like fire, floods, burglaries, 
> etc.  The property owner is usually the beneficiary (payee), although the 
> lender will have a claim on the $ if the loan is not paid off.   Here in the 
> US, the lender requires the borrower purchase this.

Okay, this is what we call "House Insurance", and it works the same
here. Our banks also require it, but it is usually a seperate thing to
the mortgage repayments. I have heard of some banks here offering it on
a monthly payment arrangement though.

> PMI:  I can't remember what the acronym stands for, but it's insurance that 
> protects the lender (the bank) in the event the borrower (homeowner) defaults 
> on the loan.  The bank is the benificiary.

Right. This is what we call "Mortgage Insurance", or, more commonly now
"LMI" - for "Lenders Mortgage Insurance" (some people were getting
confused about who was protected when it was just called Mortgage
Insurance, so it appears they're slowly changing what they call it).
Ours works differently from yours though - if you borrow more than 80%
of the value of the house you pay a lump sum at the commencement of the
loan for LMI. There are no ongoing payments. Some banks have been known
to allow you to lump the LMI into your loan. Some won't. I am not aware
of any Australian banks that have an ongoing payment style of LMI. 

> Your question makes me wonder what other, different forms of insurance or 
> taxes there are out there; and whether the template Josh created is really a 
> US one.  The ones Josh listed certainly fit my loans.
> -Olaf

In this case, it was primarilly a terminology difference. However, we do
need to be aware that we are writing software that gets used all over
the world, and some places are just downright strange...  :-).

Conrad.
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Conrad Canterford  (conrad@mail.watersprite.com.au)
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