Loan Fees, Costs & Charges
All home loans have associated fees, costs and charges. The most common ones you will encounter are as follows:
Loan application fees:
A loan establishment fee that is charged by a lender. These vary from lender to lender and typically cost between $300 and $1,000. Though some lenders will waiver these fees.
Property valuation:
The lender may charge you a fee to have the property independently valued. This is often carried out before loan approval and will be charged even if the loan is not approved. The fee is based on the property’s value and is usually charged at 0.1%. Therefore, a $300,000 property valuation will incur a $300 fee.
Property and title search:
This is a government fee that is charged by your lender for the conduct of a property search. Fees vary depending on the state that the title is held in and on the type of property. Typically, fees range from $25 to $250.
Stamp duty:
This is a government tax charge, which is incurred at the time of sale. This fee varies from state-to-state depending on whether a property is purchased to live in or as an investment, with the rate calculated as a percentage of the purchase price of the property. Therefore, the greater the home’s value, the greater the stamp duty. However, not all states charge this tax.
Conveyancing fee:
A legal service fee that is charged at the time of property settlement. A conveyancer is a property solicitor that makes sure all utility charges and other costs associated with home title transfer are accurate and correct at the time of sale. The fee charged for a conveyancer’s service is typically more than $300 and less than $1,800.
Lender’s mortgage insurance:
An insurance policy that covers the lender for loan repayment default. This insurance is mandatory if the lender lends more than 80% of the property price to a borrower. The fee charged is typically a percentage of the loaned amount. For example, if you want to borrow $255,000 to purchase a $300,000 property, mortgage lender’s insurance will cost you between $2,200 to $6,440, depending on the lender you are borrowing the funds from.
Annual and ongoing fees:
A bank fee that is charged over the duration of the loan. This varies from bank-to-bank and is usually between $5 to $20 per month.
Transfer fee:
A government fee charged to transfer the title of a property into another person’s name. Transfer fees vary in each state, and can range from $130 to $2,250.
Mortgage registration fee:
A government charge to register a mortgage in the new property owner’s name. Mortgage registration fees vary in each state, and can range from approximately $100 to $200.
For more information, visit the website of the revenue office in your state or territory as shown in our earlier table in the ‘How can the Government help’ section.
Buying a home is the biggest asset that you’ll seek to acquire in your lifetime that typically spans over 20 to 30 years. For many first time home buyers, the housing market and dealing with agents can be confusing, especially when it comes to understanding fees and charges, and wading your way through the contract before signing it.