Can I get my LMI back if I refinance?

Sometimes. Some lenders refund part of the premium if the loan is paid out early, usually within the first one or two years. Many refund nothing, so it depends entirely on your lender.

How much LMI do you get back if you refinance early?

Where refunds exist, one common scale is 40% within the first year and 20% between one and two years, worked out on the premium after stamp duty and with a minimum premium kept.

Will I pay LMI again if I refinance?

If your new loan is above 80% of the property's value, generally yes, because LMI doesn't transfer between lenders. A revaluation that gets you under 80% can avoid it.

Do I get an LMI refund if I sell my home?

The same refund rules generally apply whether the loan is paid out by a sale or a refinance. If your lender refunds and you're inside the window, you may get a share back.

Does refinancing early cost my broker anything?

Usually yes. If a loan is refinanced in the first year or two, the lender claws back the commission it paid the broker. A good broker will still tell you if moving is in your interest.

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Straight Answers · Refinancing

Can I get a lender's mortgage insurance refund if I pay out the loan early or refinance?

Bayley Clarke · Mortgage broker on the road · Last checked 1 November 2026 · 3 min read

The short answer

Some banks do. I had a client I refinanced before 12 months, and with that particular lender they were eligible for a 40% refund on their lenders mortgage insurance premium because we refinanced within the year.

So it all depends on the lender whether you'll get any of your LMI back, but it absolutely can happen. Some refund a share on a sliding scale if the loan is paid out early, and plenty refund nothing at all. That's the first thing I check before we talk about moving.

The 60 second version, filmed from the driver's seat. The rest of this page is the detail underneath it.

How LMI refunds work

Lenders mortgage insurance protects the bank, not you, and you pay for it up front when you borrow above 80% of the property's value. Most people add the premium to the loan. If that loan gets paid out early, because you refinance or sell, some lenders and their insurers will hand part of the premium back, on the logic that they covered you for a shorter time than they priced for.

Where refunds exist, they generally run on a sliding scale. The pattern on one of the big bank groups is 40% back if the loan is discharged within the first year and 20% between one and two years, with a minimum premium kept either way. Another lender refunds part of the premium if you discharge within 24 months. After that window, the refund is generally gone.

Why it's not quite 40% of what you paid

The refund is normally worked out on the premium after stamp duty, because the stamp duty on the insurance isn't refunded. So the cheque you see is less than 40% of the total amount that was added to your loan. Still real money on a premium in the thousands, just not quite what the headline suggests.

And plenty of lenders refund nothing. Some say so in their policy, and the lenders that charge their own low deposit fee instead of insurance generally don't refund it at all once it's paid. If your loan is with one of those, there's nothing to claim, and the refinance has to stack up on its own.

Check the new loan's LVR before you move

Here's the bit that catches people. If you're refinancing inside a year or two of buying, there's a fair chance your loan is still above 80% of the property's value. LMI doesn't transfer between lenders, so a new lender may charge you a fresh premium on the new loan, which can wipe out the refund and then some.

So the real maths is the refund coming back, minus any new LMI, minus switching costs, against what the new loan saves you each year. Sometimes a revaluation gets you under 80% and the new lender doesn't need insurance at all, and that's when an early refinance with a refund can genuinely be worth it.

The honest bit: if a broker wrote your loan, talk to them first

When a loan is refinanced in the first year or two, the bank takes back the commission it paid the broker who set it up. That's clawback, and it happened to me with the client above. I did it anyway because the saving was worth it for them.

If a broker wrote your loan, have the conversation with them first. A good one will look at the refund and the numbers honestly, even if it costs them. If they won't, I'm happy to run it for you.

Paid LMI in the last couple of years and thinking about moving?

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Next question

Do I need to stay with my bank for a minimum period, and what does clawback mean?

No minimum on a variable loan. Fixed loans carry break costs.