Home loan fees

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. Also called establishment 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, though many lenders waive establishment fees on some products or for special promotions.
• 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.

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.

Compare home loans

Written by

Richard Whitten

Money Editor

Richard Whitten is Finder’s Money Editor, with over seven years of experience in home loans, property and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Graduate Certificate in Communications from Deakin University. See full bio

Richard's expertise

Richard has written 639 Finder guides across topics including:

• Home loans
• Property
• Personal finance
• Money-saving tips