Home loan fees. There is one for this and a little one for that and before you know it, it’s cost you a lot of money. Learn all about those nasty little fees associated with getting a home loan.
Other factors come into play when you are contemplating taking out a home loan. More that the interest rate and repayment schedule must be taken into account when selecting your home loan and your mortgage broker is vital in this process. So make sure you use a good one!
There are a number of fees and charges associated with your home loan that may be payable, and it is a great idea to know exactly what you will be paying before you sign your mortgage documents.
Your mortgage broker will guide you though the fee’s and charges associated with your home loan, but the following may assist you understand what they are:
Lenders Mortgage Insurance
If the borrower does not have at least a 20% deposit for the property, the lender will usually require lenders mortgage insurance (LMI). This is usually a once only premium paid upon settlement, and with much debate protects the lender, not the borrower should they default on the home loan. For more information see “What is Lender’s Mortgage Insurance”.
This fee may be charged if you desire to have your home loan split for example having a $300,000 FIXED interest rate component and a $550,000 VARIABLE interest rate component.
This is a fee that may be payable if you want to change your home loan product from a variable interest rate to a fixed interest rate.
Legal Fees and Disbursements
The borrower will have to pay legal fee’s and disbursements to their chosen solicitor/conveyancer who will act on their behalf to finalise the mortgage contract. They will also complete relevant checks as to the ownership to the intended property purchase and rectify any problems that may occur along the way.
Break costs are usually incurred if your home loan is a fixed interest rate and it is broken before the fixed rate term has expired. The fee will depend on the home loan amount, the current interest rate and the outstanding amount left in the fixed rate term.
Application Fee / Establishment Fee
A once off application fee is to be paid to the lender once your home loan is unconditionally approved. Most lender’s will deduct this fee automatically from the home loan proceeds. It covers the setting up of your home loan. Some application/establishment fee’s will include the valuation (one property) and the lender’s legal fee’s. It is very important to know exactly what is and what isn’t covered in this particular charge.
Deferred Establishment / Exit / Discharge Fee
If you re-finance, payout and in some cases change home loan products a fee may be involved that is payable by you the consumer. The fee will depend on whether you are staying with the same lender, how much your loan is for and how long you had had your home loan.
What is Stamp Duty?
When purchasing a home you will be required by law to pay stamp duty to your respective State government. This is charged on a sliding scale based on the value of the property. Stamp duty amounts vary from state to state.
Mortgage Registration Fees
The Land Titles office in your state requires a payment to be paid when the property is sold and is paid by the party that is purchasing the property.
Transaction fee’s are usually associated with mortgage accounts for example line of credit, offset accounts. They are charged when you withdraw funds from the account. The majority of lenders offer a number of fee free transactions per month.
Property Valuation Fee
All lenders have a panel of accredited property valuers to conduct a valuation on the property they are lending money for. This cost may at times be passed onto you the borrower.
Annual Home Loan Fees
Some home loans and particularly home loan packages have an annual fee rather than a fee charged monthly. The annual fee also covers the costs of managing and administration of the home loan.
Monthly fee’s are usually included in your repayment to cover the costs of managing your home loan.