A breakdown of mortgage and lender fees

Whether you choose a variable rate, a fixed rate or a combination of the two, your home loan will come with a set of fees and charges. The Australian Securities and Investment Commission (ASIC) advises home buyers to carefully assess the fees credit providers charge as this will ultimately determine how much a loan will cost.

Your home loan provider is required to clearly outline any fees or charges associated with your mortgage. Read the fine print or ask your legal advisor or conveyancer to review the mortgage contract, as different lenders charge different fee rates and call similar fees by different names. Read on for details of common mortgage-related fees.

Mortgage registration fee

When you take out a home loan with a lender, it must be registered with the government and this attracts a fee. Your lender will pay your mortgage registration fee to the relevant state authority. The charge varies from state to state. For example, here are the state-based mortgage registration fees for the purchase of a primary residence (not a first home) at a sale price of $650,000 and with a 20 per cent deposit ($130,000) – Queensland: $162.90; New South Wales: $107; ACT: $127; Victoria: $111; South Australia: $152; Northern Territory: $137; Western Australia: $160; and Tasmania: $126.54.

Establishment, approval or application fee

This is a one-off fee charged when your mortgage is being prepared and is called different things by different lenders. A fee of $600 is a common charge across the major lenders, though some loan products do not attract an establishment fee and others are higher.

Lenders Mortgage Insurance

If you borrow more than 80 per cent of the property’s sale price (i.e. your deposit is less than 20 per cent), your lender will most likely require you to pay Lenders Mortgage Insurance (LMI). The LMI premium is usually in the form of a one-off payment at the commencement of your loan.

Service or administration fees

These are charged differently according to the lender and product type. They may take the form of a monthly service fee or a yearly administration fee.

Rate lock fee

If you choose to lock in an interest rate for a period of time, you are generally charged a rate lock fee. The fee will depend on the lender, the loan product and term of the loan.

Early repayment adjustment (economic cost)

If you repay your loan in full, or in part, before the end of the fixed term, there may be early repayment fees. This cost may also apply if you switch to another fixed or variable interest rate. Some fixed term loans allow extra repayments up to a certain threshold, so it is important to talk about early repayments with your lender.

Other fees you should look out for include redraw fees, settlement fees, security guarantee fees, offset fees and late payment fees.