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Complete guide to home loan fees

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Aside from monthly repayments, you have to pay additional fees and expenses when taking out a home loan. Lenders can charge you upfront home loan fees when you apply, annual or ongoing fees to maintain the mortgage, and discharge or exit fees when you end the loan or refinance. These fees can end up costing you thousands of dollars over the life of the loan. 

Learn all about the home loan fees so you can understand the true cost of your mortgage.  

Upfront fees: Application, valuation, settlement

These fees are paid during the loan application process. When shopping around for a loan, ask lenders for a list of their upfront fees. Across lenders, loan products will generally require some form of upfront costs to set up your loan and finalise the transaction such as: 

  • Application or establishment fees – Typically, a one-off, non-refundable payment that costs around $150 to $700. This fee is charged at the beginning of your home loan application covering processing and documentation. Some lenders waive this fee upon request. 

  • Property valuation fees – This is charged to cover the cost of your property as valued by the lender. This fee can range from $100 to $300 for metro locations and could be upwards of $1,000 for regional and rural locations. 

  • Settlement fee Charged when you first take out a home loan or if you decide to refinance to a new loan. 

  • Conveyancing fees – Paid to a conveyancer or solicitor to transfer the ownership of a legal title of land from the seller to the new owner. This can cost around $500 to $2,200. 

  • Search processing fee – This is paid to the lender when performing a title search for the property you want to buy. Usually, this fee costs around $50. 

  • Lenders mortgage insurance – If your deposit is smaller than 20% you may need to pay lenders mortgage insurance

  • Stamp duty fees – You’ll have to pay stamp duty on your home loan. This is paid after the settlement of the mortgage. The fee amount will be based on the cost of your property, state or territory, and whether you’re a first-time home buyer. You can use a stamp duty calculator for an estimate. 

  • Mortgage registration fees – When registering the property as a security on your mortgage, you will be charged a fee by the state or territory government. This is paid when the loan is established or discharged. 

  • Legal fees – These costs are associated with hiring a conveyancer or solicitor to help you arrange legal documents during settlement. 

Some lenders may have more or fewer upfront fees than those listed above. If you're looking to save on upfront fees, loans.com.au does not charge any application fee costs when applying for a home loan. 

Ongoing fees: Annual, monthly, late payment 

These fees pertain to recurring costs you pay during your mortgage term. Common ongoing home loan fees include: 

  • Annual fees – This fee is charged each year for the duration of the loan. The amount depends on the loan product, loan amount, and lender. 

  • Monthly fees – These fees go toward the servicing and administration of the loan and can include charges for redrawing facilities or any prepayment fees on a fixed-rate loan. 

  • Late payment fees – You must pay this fee if you don’t make your minimum monthly repayments. 

  • Additional repayment fees – This is charged when you pay more than your monthly repayments. 

  • Redraw fees – This applies to home loans with redraw facilities. Depending on the lender, you may be charged a fee per redraw. Some lenders offer fee-free redraws.  

  • Offset sub-account fee Offset sub-accounts are included in some packaged home loans. However, if your loan does not have it, you could opt for an offset sub-account for which some lenders will charge a fee. 

  • Switching/variation fees If you’d like to switch to a different loan product under the same lender, you could be subject to this fee. 

  • Portability fee – Portability allows you to change the security of your home loan from your property to another asset. The cost to use this feature is usually $200 or more. 

Some loan products will also charge an account-keeping fee. Ensure that you are mindful of such fees as these will make a difference to you over the life of your loan. 

If you’re looking for home loans with limited ongoing fees, loans.com.au offers mortgages with no monthly or annual fees and repayment fees. We also have unlimited free redraws! Talk to our friendly lending specialists to learn more. 

Exit fees: Discharge, early exit, fixed-rate break cost 

You may be charged exit fees if you decide to leave your lender. Whilst deferred establishment 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. Exit fees typically include the following: 

  • Discharge fees If your mortgage is paid in full, you will be required to pay discharge fees that cover the finalisation of the mortgage process. 

  • Early exit fee You may be charged an extra fee if you pay off your mortgage within a certain period before the end of your home loan. 

  • Settlement or Agent fees This fee is usually charged by your lender for their agent to attend your settlement, whether it be physical or online. 

  • Fixed-rate break cost – Breaking a fixed-rate home loan generally attracts a penalty which is determined by the market. Actions that break a fixed-rate contract are switching to a different product, exceeding the extra repayment limit and repaying the loan in full.   

When looking for a home loan, it pays to find a lender with a good comparison rate and not just a low interest rate. Be aware of hidden fees, as they can dramatically impact the overall cost of your loan. 

At loans.com.au, we offer low-rate home loans with no application fees, ongoing fees, or early repayment fees. Check out our range of home loan options here

About the article

As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.

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