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
In our home loan fees guide:
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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 fee | Fee 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. |
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 fees | Home 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.
Other home buying fees to consider
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.
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.
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.
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.
“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.com.au'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).
FAQs about home loan fees
Can I roll the fees into my home loan?
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.
Does the comparison rate include all home loan fees?
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:
- Your monthly repayment amount
- Your interest payable over the life of the loan
- Your fees over the loan term
Are there home loans with no fees?
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.
Do I pay more fees if I have a low deposit or bad credit?
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.
Are home loan fees tax deductible for property investors?
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.
Shopping around for the right loan can save you thousands of dollars in interest and fees.
Home Loans guides and 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.
Written by
Senior Finance Writer
Megan Birot
Reviewed by
Home Loans Expert
Mansour Soltani
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