Home loan fees
The average home loan has around $370 in upfront fees. But some home loans charge basically no fees at all.
Key takeaways
- Lenders charge you various home loan fees. This includes application, legal and valuation fees when you get a home loan, ongoing fees to maintain the mortgage account and exit fees.
- These fees can end up costing you hundreds, even thousands of dollars over the life of the loan. But some loans have almost no fees at all.
- The average home loan has upfront fees of around $371 based on figures from Finder's database.
Upfront fees
Many loans will come with various fees to be paid upfront. These can be expensive, and will impact the overall cost of the loan. But they're a one-off cost.
- Application fees. Sometimes also called establishment fees (although these can be 2 different fees), these are fees that cover the cost of the documentation of the new mortgage. This is a one-off payment that can roughly cost between $200–$600 depending on the loan.
- Establishment fees. Establishment fees are usually charged at the start of the loan. Although the term is often interchangeable with 'application fees', they can be 2 separate fees so it's something to keep a close eye on.
- Valuation fees. This fee covers performing a valuation of the property you’re purchasing. This helps the lender ensure the amount you’re borrowing and the size of your deposit are appropriate. This fee can cost between $100 to $300, though many lenders don't charge this fee.
- Legal fees. The loan application process includes a contract that has to be handled by a legal team. This fee covers those legal services and the preparation of legal documents for the home loan. This can cost upwards of $100 depending on the lender.
- Settlement fees. This covers a lender's legal costs during the settlement process. This fee ranges from $100 to $400.
What are the fees on the average home loan?
Based on analysis of over 6,000 home loan rates in Finder's database, the average home loans comes with around $371 in upfront fees.
This includes application, settlement, legal and valuation fees. It does not include exit, discharge, switching, ongoing service fees or government fees.
Source:
Finder's home loan rate database
Other upfront costs to watch out for
The fees on this page are not the only costs associated with getting a mortgage. You should also keep in mind costs like:
- Stamp duty. The cost of stamp duty depends on your state, property value and whether you're eligible for a first home buyer concession.
- Lenders mortgage insurance. If your deposit is smaller than 20% you may need to pay thousands in lenders mortgage insurance.
- Conveyancing fees. Your conveyancer may charge between $500 and $2,000.
- Mortgage registration fees. A state government charge that costs between $145 and $187.
Check out our detailed costs guide for a full breakdown of all upfront property cost.
Ongoing fees
In addition to upfront fees, some loans also charge ongoing fees. These may be administrative fees, or fees for features the loan offers. Ongoing fees can make a significant difference to the overall value of a home loan and include:
- Monthly service fees. These fees go toward the servicing and administration of the loan. Fees may include charges for redraw facilities or any prepayment fees on a fixed rate loan. This fee is usually between $5 and $15.
- Annual fees. Banks charge annual fees on package home loans, which usually offer a discount on the interest rate and other financial products offered by the lender. These annual fees are generally between $300 and $400.
- Redraw fees. Banks offer redraw facilities on some home loans, allowing you to withdraw any extra repayments you have made on your loan. You may be charged a small fee each time you redraw, which can cost approximately $50 per redraw.
Exit fees
A lender may charge fees when you discharge your home loan, whether by paying off the loan or refinancing:
- Discharge fees. Once your mortgage is paid in full, you will be required to pay discharge fees that cover the finalisation of the mortgage process and the paperwork involved in the change of title. This usually costs $350–$500.
- Fixed rate break costs. Breaking a fixed rate mortgage usually attracts a penalty which is determined by how much interest rates in the market have come down since you took up the fixed rate mortgage. These fees vary, but can run into the thousands of dollars. Here’s a look at how break fees are calculated.
How to avoid home loan fees
One of the easiest ways to reduce your mortgage cost is to keep loan fees down. Some loan fees cannot be avoided, but lenders may waive fees as part of special offers, so regularly compare home loans in the market to see what deals you may be able to make use of.
Remember to compare home loans to know how often a fee is charged, so you know if you’re getting the best deal.
Keep in mind that if you're refinancing home loans you may be able to negotiate with your new lender. Some lenders also offer home loan cashbacks when you switch, which offsets any fees.
Is the comparison rate useful?
By law, Australian lenders have to display a comparison rate alongside the interest rate. This is a rate that factors fee costs into the home loan rate.
In theory it helps you compare. But it's confusing because it's a hypothetical calculation based on various factors. In general, a low comparison rate means the loan has low fees.
More resources on Finder
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Hi
I noticed that some banks charges both settlement and discharge fees. What is the difference between the two ? Is settlement an upfront cost whereas disharge is when you refinance or done with paying home loan st the end ? Please advise thanks.
Hello Darren,
Thank you for your question.
According to Moneysmart’s choosing a home loan, discharge fees, settlement or termination fees are defined the same. This fee is paid when you finish paying off the balance on a loan, or refinance with another lender. If you exit early from a loan with a fixed interest rate, you may have to pay an early discharge fee, also known as a “break fee”, to make up for any scheduled interest payments the lender will miss out on.
You must consult with your lender about the specific arrangement on your loan about such fees as this may vary.
Hope this helps.
Cheers,
Jonathan
My husband had two properties, his former wife never gave half his share he wants to sell the property she stays in because she has her father’s house he had a lawyer that acted as the receiver but demist himself my husband a pensioner we been struggling since 2004.
Hi Charol,
Thanks for reaching out.
I’ve sent you an email to follow up with this enquiry.
Thanks,
Belinda
can you help me if I would refinance my home loan which is the best to go for.
Hi Francis,
Thanks for the question.
You should check your personal and financial situation to see if there are any signs that suggest that it may be a good time to refinance. If you are opting for a better interest rate, consider negotiating with your current lender.
You can also read our guide on refinancing home loans and compare your mortgage to the offers available.
I also recommend getting in touch with a licensed mortgage broker. A broker can help you understand your financial position and they can leverage their panel of networks to find a lender that’s more inclined to review your application.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you.
I hope this helps,
Marc