I’ve recently talked about the true costs of purchasing a property, so I think it’s important to discuss other fees that a lender can impose so that you’re aware of these when choosing a home loan. Every home loan product is different, so it’s important to consider the fee structure.
Given that a loan is a very important transaction, there are many fees and charges to look over and understand. When looking for a home loan you should firstly enquire and confirm the upfront fees applicable. Most loan products will require some form of upfront costs to set up your loan and finalise the transaction. Whether it’s an establishment fee, application fee or valuation fee, you should make sure that you are aware of all costs so that there are no hidden surprises when you settle your loan. Most lenders should be able to provide a list of these fees that will be applicable to you at the initial application stage.
Annual fees are another cost to be aware of when choosing a lender. Dependent on the product, annual fees might be applicable, and you will be charged this fee each year for the duration of the loan.
Some loan products will also charge an account keeping fee. It is important that you make sure that you are mindful of such fees as these will make a difference to you over the life of your loan.
Finally, discharge fees are a cost that you must always enquire about, to determine how much you will be charged if you decide to leave that lender. Whilst exit fees are now abolished, most lenders will still charge a fee if you decide to leave, due to the work required to discharge your mortgage.
When looking for a home loan it pays to find a lender that has a great rate, but it is additionally important that you are conscious of hidden fees, as they too will dramatically impact the cost to you over the life of your loan. The comparison rate is a good indication of the true cost of a home loan, and it allows you to compare different lenders.
By Marie Mortimer
24 November 2015
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