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Home Loan Fees Explained

  • Fees can be the equivalent of 1-3% of your home loan amount
  • Home loans have upfront, ongoing, feature and exit fees
  • You can ask your lender to waive some of your home loan fees

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Home loan fees and repayment options

Summary of home loan fees and what they cost

Here's a list of various fees and charges you may encounter when shopping or applying for a home loan. Charges will vary between lenders.

Home loan fee

Application fee

Fee estimations*

$150- $750

When is it charged?

Upfront fee

Description

Cost to set up your home loan. It’s also known as a loan processing fee or establishment fee.

Home loan fee

Document processing fee

Fee estimations*

$100 - $600

When is it charged?

Upfront fee

Description

The cost of preparing and processing documents for a new loan application.

Home loan fee

Search processing fees

Fee estimations*

$50 per search

When is it charged?

Upfront fee

Description

Paid to your lender for the title search or any other searches related to your application.

Home loan fee

Valuation fee

Fee estimations*

$100 - $300 — or dependent on property location and value

When is it charged?

Upfront fee

Description

Charged to cover the cost of conducting a valuation on your property — either online or by an external valuer.

Home loan fee

Rate lock fee

Fee estimations*

$450 - $750

When is it charged?

Upfront fee

Description

Fee charged to ‘lock’ your fixed rate while your lender processes your home loan application.

Home loan fee

Security guarantee fee

Fee estimations*

$200 - $300

When is it charged?

Upfront fee

Description

Payable if a guarantor is added to the home loan for additional security.

Home loan fee

Settlement fee

Fee estimations*

$150 - $300

When is it charged?

Paid upon settlement

Description

Cost to arrange settlement, organise the balance transfer to the seller and title transfer to you. Payable regardless of whether the lender attends settlement or not.

Home loan fee

Progressive drawdown fee (construction home loans)

Fee estimations*

$50 - $100

When is it charged?

Each time funds are drawn down

Description

The lender charges a fee to release each ‘progress payment’ to the borrower as the build progresses.

Home loan fee

Monthly service fees

Fee estimations*

$8 - $10

When is it charged?

Ongoing fee

Description

A monthly fee that covers the costs of administering your home loan. Also known as a loan service fee.

Home loan fee

Annual package fee

Fee estimations*

$300 - $500

When is it charged?

Ongoing fee

Description

A yearly fee charged on a package home loan to bundle your mortgage with other financial products like a credit card or savings account.

Home loan fee

Late/missed payment fees

Fee estimations*

$15 - $25 per month

When is it charged?

Ongoing fee

Description

Charged on any overdue home loan repayments. Also known as arrears fee.

Home loan fee

Redraw fees

Fee estimations*

$0 - $20 per redraw

When is it charged?

Feature fee

Description

Charged when redrawing extra payments made on your home loan — usually on fixed-rate home loans.

Home loan fee

Offset account fee

Fee estimations*

$8 - $10 per month, yearly or as a one-time fee of $75 - $100

When is it charged?

Feature fee

Description

Charged to link your offset account and home loan account, including servicing.

Home loan fee

Portability fee

Fee estimations*

$150 - $300

When is it charged?

Feature fee

Description

Cost to transfer your home loan to another property (i.e. when you buy a new home).

Home loan fee

Extra repayments fee

Fee estimations*

$0 - $20

When is it charged?

Feature fee

Description

Charged if you pay your home loan off early or make early or extra repayments — usually on fixed-rate home loans.

Home loan fee

Fixed rate break cost

Fee estimations*

Dependent on the lender

When is it charged?

Exit fee

Description

Fee if you repay a fixed rate home loan early or switch to a variable rate before your fixed term ends.

Home loan fee

Exit fees

Fee estimations*

Fees vary

When is it charged?

Exit fee

Description

Fees payable when exiting a home loan early (i.e. refinancing). Exit fees have been banned on new home loans from 1 July 2011.

Home loan fee

Switching fee

Fee estimations*

$100 - $300

When is it charged?

Exit fee

Description

A fee for refinancing to a new home loan or new lender.

Home loan fee

Discharge fee

Fee estimations*

$350 - $500 per mortgage

When is it charged?

Exit fee

Description

Payable when you pay off your home loan in full and the lender discharges your mortgage.

Home loan feeFee estimations*When is it charged?Description

Application fee

$150- $750

Upfront fee

Cost to set up your home loan. It’s also known as a loan processing fee or establishment fee.

Document processing fee

$100 - $600

Upfront fee

The cost of preparing and processing documents for a new loan application.

Search processing fees

$50 per search

Upfront fee

Paid to your lender for the title search or any other searches related to your application.

Valuation fee

$100 - $300 — or dependent on property location and value

Upfront fee

Charged to cover the cost of conducting a valuation on your property — either online or by an external valuer.

Rate lock fee

$450 - $750

Upfront fee

Fee charged to ‘lock’ your fixed rate while your lender processes your home loan application.

Security guarantee fee

$200 - $300

Upfront fee

Payable if a guarantor is added to the home loan for additional security.

Settlement fee

$150 - $300

Paid upon settlement

Cost to arrange settlement, organise the balance transfer to the seller and title transfer to you. Payable regardless of whether the lender attends settlement or not.

Progressive drawdown fee (construction home loans)

$50 - $100

Each time funds are drawn down

The lender charges a fee to release each ‘progress payment’ to the borrower as the build progresses.

Monthly service fees

$8 - $10

Ongoing fee

A monthly fee that covers the costs of administering your home loan. Also known as a loan service fee.

Annual package fee

$300 - $500

Ongoing fee

A yearly fee charged on a package home loan to bundle your mortgage with other financial products like a credit card or savings account.

Late/missed payment fees

$15 - $25 per month

Ongoing fee

Charged on any overdue home loan repayments. Also known as arrears fee.

Redraw fees

$0 - $20 per redraw

Feature fee

Charged when redrawing extra payments made on your home loan — usually on fixed-rate home loans.

Offset account fee

$8 - $10 per month, yearly or as a one-time fee of $75 - $100

Feature fee

Charged to link your offset account and home loan account, including servicing.

Portability fee

$150 - $300

Feature fee

Cost to transfer your home loan to another property (i.e. when you buy a new home).

Extra repayments fee

$0 - $20

Feature fee

Charged if you pay your home loan off early or make early or extra repayments — usually on fixed-rate home loans.

Fixed rate break cost

Dependent on the lender

Exit fee

Fee if you repay a fixed rate home loan early or switch to a variable rate before your fixed term ends.

Exit fees

Fees vary

Exit fee

Fees payable when exiting a home loan early (i.e. refinancing). Exit fees have been banned on new home loans from 1 July 2011.

Switching fee

$100 - $300

Exit fee

A fee for refinancing to a new home loan or new lender.

Discharge fee

$350 - $500 per mortgage

Exit fee

Payable when you pay off your home loan in full and the lender discharges your mortgage.

*Note: Fee estimations based on various home loan products from ANZ, NAB, Commbank and Westpac.

How fees impact your home loan

When you apply for a home loan, the interest rate isn’t the only cost to consider. Home loan fees can also impact what you pay.

To make sure you know how much you’ll be paying in fees and when, check your home loan’s Key Fact Sheet or schedule of fees for the full breakdown of fees and charges.

Lenders charge home loan fees based on the type of home loan you choose and the service you require.

Broadly speaking, home loan fees may be charged:

  • When you apply
  • When the loan is finalised (settlement)
  • Throughout the loan term
  • If you break a fixed-rate home loan
  • If you refinance to another lender
  • If you require a guarantor
  • When you repay the loan in full

Home loan fee cost comparison

Home loan fees can have a significant impact on the overall cost of your mortgage. Here’s an example for a $600,000 home loan with a 6.00% interest rate over 30 years, with lower and higher fees.

Loan amount

Home loan with lower fees

$600,000

Home loan with higher fees

$600,000

Interest rate

Home loan with lower fees

6.00% p.a.

Home loan with higher fees

6.00% p.a.

Loan term

Home loan with lower fees

30 years

Home loan with higher fees

30 years

Upfront fee

Home loan with lower fees

$350

Home loan with higher fees

$650

Ongoing fees (monthly)

Home loan with lower fees

$10

Home loan with higher fees

$15

Discharge fee

Home loan with lower fees

$300

Home loan with higher fees

$500

Monthly repayments

Home loan with lower fees

$3,609

Home loan with higher fees

$3,616

Total fees payable

Home loan with lower fees

$4,250

Home loan with higher fees

$6,550

Total to repay on loan (principal, interest & fees)

Home loan with lower fees

$1,299,685

Home loan with higher fees

$1,302,332

Cost difference

Home loan with lower fees

Home loan with higher fees

+$2,647

Home loan with lower feesHome loan with higher fees

Loan amount

$600,000

$600,000

Interest rate

6.00% p.a.

6.00% p.a.

Loan term

30 years

30 years

Upfront fee

$350

$650

Ongoing fees (monthly)

$10

$15

Discharge fee

$300

$500

Monthly repayments

$3,609

$3,616

Total fees payable

$4,250

$6,550

Total to repay on loan (principal, interest & fees)

$1,299,685

$1,302,332

Cost difference

+$2,647

In this example, the home loan with higher fees:

  • Ends up costing $7 more a month in repayments
  • Costs $2,647 more overall (in fees plus interest on the fees) than the home loan with the lower upfront and ongoing fees (despite having the same interest rate)
  • Has fees equivalent to 1.09% of the loan amount compared to just 0.71% for the home loan with lower fees.

When applying for a home loan or refinancing, look at the comparison rate, not just the interest rate. The comparison rate estimates the overall cost of a home loan per year, including fees.

Other home buying fees to consider

1

Lender’s mortgage insurance (LMI)

Your lender may charge you for lender’s mortgage insurance (LMI) if your deposit is less than 20% of the property’s value — that is if your loan-to-value ratio (LVR) exceeds 80%.

LMI is an insurance premium that covers the lender against the risk of default. It’s calculated on a tiered scale, based on your LVR. You can add LMI to your home loan to avoid paying for it upfront, although this will increase your total interest payable.

2

Stamp duty

Stamp duty is a state government tax on property purchases and title transfers. It’s calculated as a percentage of the property’s value, ranging from 3-5%. Stamp duty rates vary in each state or territory. Use our stamp duty calculator to estimate your costs. Stamp duty concessions or exemptions apply to eligible first-home buyers in most states.

3

Mortgage registration fees

Your state or territory government will charge you mortgage registration fees to register your mortgage on a property title. This registers your property as the security on the home loan, allowing future buyers or lenders to check caveats on your home.

4

Legal & conveyancing fees

When you buy a home, you’ll usually need to engage a conveyancer or solicitor to handle all the legal paperwork and processes, like transferring the property title to your name, etc. Conveyancing fees can range between $1,200 and $2,400.

How to get home loan fees waived

Research lenders that offer fee waiver benefits or engage a mortgage broker with knowledge on which lenders are likely to waive home loan fees for new customers.

Mansour Soltani home loan expert

Mansour Soltani , Money's home loan expert

“A mortgage broker can generally negotiate with a lender to waive the home loan application fee and other fees. You can also ask the lender yourself to waive some fees or match the offer of a competitor to win your business. It’s all fair game. Lenders are generally more likely to waive home loan fees if you have a decent-sized home loan or good credit rating.”

Mansour Soltani , Money's home loan expert

Why do lenders charge home loan fees?

Lenders charge fees to cover the cost of processing and administering your home loan.

When you apply for a home loan, a home loan specialist has to review your financial documents, conduct a credit check, organise a property valuation, process the legal documentation (e.g. sale agreement, deed of trust) and liaise with conveyancers until settlement day.

After that, your lender still has to manage your home loan account until it’s discharged (which can take up to 30 years).

Home loans guides & resources

What's the next step on your property journey? Our home loan guides will help you navigate the road ahead, whether you're buying, building or looking to save on an existing loan.

FAQs about home loan fees

Yes, some lenders may allow you to roll some of the fees into your home loan — known as capitalisation. This may reduce your upfront costs, but it will increase your home loan amount and the interest you pay over the life of the loan.

The comparison rate includes the interest rate and standard home loan fees, but not all fees. Generally, fees that might apply depending on how you use your home loan – such as redraw fees, early repayment fees and other feature fees – are not included in the comparison rate but can still impact the cost of your home loan.

When taking out a home loan, you should always understand its true cost, including:

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  • Your monthly repayment amount
  • circle-green-tick
  • Your interest payable over the life of the loan
  • circle-green-tick
  • Your fees over the loan term

There are some ‘no-fee’ home loans in the market, but generally these are basic loans that don’t come with many extra features. Alternatively, ‘no-fee’ home loans refer to no upfront or ongoing fees. You may still have to pay fees for late repayments and discharge fees even on the cheapest home loans.

Some lenders may charge minimal fees and others may waive their application fee and other upfront fees to win your business. You may just have to ask.

You may pay LMI and a higher interest rate if you have a low deposit, but your fees on the home loan product usually don’t change. Bad credit home loans may charge an additional ‘risk fee’, which could be up to 1% of your loan amount and higher interest rates, but fees should remain the same across the board. This is generally also the case for other forms of low doc home loan.

Yes, ‘borrowing expenses’ such as some home loan fees directly incurred when taking out an investment home loan are tax deductible, according to the Australian Taxation Office (ATO). These often include valuation fees, loan establishment fees, title search fees, etc.

Megan Birot Money.com.au writer

Written by

Megan Birot

Megan is a finance writer with more than 10 years of experience in the industry. She’s passionate about helping people make sense of financial topics and principles. She's certified in Finance & Mortgage Broking and is compliant to provide general advice in Tier 1 General Insurance.

Mansour Soltani home loan expert

Reviewed by

Mansour Soltani

Mansour Soltani is Money.com.au’s home loans expert. He’s a mortgage broker with more than 20 years of experience in the finance and real estate industry. Mansour is the Director of Soren Financial and has been featured in publications such as the ABC, Domain.com.au and Australian Broker.

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