Fees and charges

When you apply for a home loan, you will most likely be liable for a range of fees and charges in relation to your home loan application. You should plan for the following lender and legal fees. Of course you may also be liable for various other fees associated with the purchase of property or moving property. Your mortgage broker can confirm which fees will be applicable once they understand your specific needs.

Bank and Lender Fees – Entry / Setup Fees

Application Fee

Also called an establishment fee, an application fee is charged by the lender to cover the initial costs of processing your home loan application.

Lenders Mortgage Insurance (LMI)

LMI is usually required when the Loan to Value Ratio (the value of the loan amount opposed to the value of the property) is greater than 80%. LMI protects the lender from any losses that may occur as a result of a default by the borrower (i.e. the borrower forgoes repayments). Please note LMI does not offer any protection to the borrower.

Valuation

A valuation is an assessment on the market value of a property at any given time. Lenders may require a valuation on the property you intend to purchase or use as security for your home loan. Any valuations required will be at your cost. Your Loan Market mortgage broker may be able to assist you to arrange a valuation.

Bank and Lender Fees – Exit Fees

Deferred Establishment Fee

Also called an Early Termination Fee, this may be payable if you have your home loan with a n0b-bank lender and choose to discharge your home loan within a specific timeframe, usually up to about five years. Even if you have paid application/establishments fees at the commencement of your loan, you may still be liable for deferred establishment fees. This is because the lender absorbs or ‘defers’ some costs associated with setting up your loan, which they claim back if you discharge within a set time frame.

Discharge Fee

Sometimes called an Exit Fee, a discharge fee is payable at any time you discharge your home loan. This fee covers the administration costs of preparing your loan discharge documents.

Penalty Interest

Payable on fixed loans for early discharge. When a lender agrees to a fixed term loan, they are relying on the loan being held for the full term in order to recoup their own costs for funding the loan.

Bank and Lender Fees – Ongoing Fees

Account keeping fees

You may incur account keeping fees on your home loan account if you have a Line of Credit home loan. Account keeping fees will usually be added monthly to your home loan account in this instance.

Package fees

If you have your loan packaged with other banking products, such as a savings account and credit card, you may be charged an annual fee to cover the costs of the package. Generally if you are paying package fees, you will not be charged account keeping fees or credit card membership fees.

Other lender fees

Account transaction fees

You may be charged a fee for certain account transactions, such as redrawing money from your home loan. These fees are usually based on usage.

Switching Fee

A switching fee may be charged if you switch from one product to another within the same lender eg. variable rate to fixed rate home loan. This fee covers the administration costs of the lender.

Legal fees

Legal fees relate to the legal processing of your property purchase by a qualified conveyancer or solicitor. There are generally two components to the conveyancing fee charged by a solicitor or licensed conveyancer: a legal fee and a disbursement fee. Legal fees cover the time and skill of your solicitor/conveyancer; disbursement fees cover any costs incurred by your solicitor/conveyancer in conducting enquiries and searches on your behalf. Depending on the number of searches that your solicitor conducts, this is likely to affect the final cost.

For more information on Home Loan Fees and Charges

For more information on fees and charges associated with your home loan application and property purchase, or the home loan that is in your best interest, talk to your local mortgage broker or call us at any time on 0508 722 205 (+64 9 377 7347).