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Guide to Mortgage Fees
This guide explains what all the fees are for, and
how to avoid some of them.
When taking out a home loan it's not as simple as
one monthly or fortnightly payment. There are a number
of additional costs the borrower will incur in the process
of buying a home. Your Excel Home Loans Loan Mortgage
Consultant will guide you through the fees, so there
are no surprises after you have signed on the dotted
line.
The following is a list of the additional costs associated
with taking out a mortgage. Don't panic, you most likely
won't have to pay all of them. What and how much you
pay, depends on which lender you choose, & on your
individual circumstances.
Application or Establishment Fee:
Usually a once off fee paid to the lender upon getting
unconditional approval for the loan to cover the cost
of setting up the home Loan.
Break Out Costs: Lending institutions
may charge a fee if you break out of a Fixed Rate Loan
before the end of the fixed period. Or if you payout
a loan which was financed at a cheap honeymoon rate.
The amount charged usually depends on the balance of
your loan account.
Deferred Establishment Fees or Exit Fees:
These fees usually occur if you decide to refinance
a loan or move to another loan product. The fee will
depend on whether you're moving your loan from one lender
to another, or to a new product from the same lender.
Legal Fees and Disbursements: These
fees are charged by the borrower's solicitor to the
borrower to finalise the mortgage contract. They are
to check the vendor has the right to sell the property
and if so, change the ownership of the property to the
borrower's name
Lender's Mortgage Insurance (LMI):
If the borrower doesn't have a 20% deposit for the property
the lender will usually require LMI. This is a once
only premium paid on loan settlement to protect the
lender (not the borrower) in case of default on the
loan.
Monthly Account Management/Service Fees:
Charged monthly and are usually included with your repayment,
to cover the costs of administering and managing the
mortgage.
Mortgage Registration Fee: This is
a set fee paid to the Land Titles office of the State
Government when the property is sold and is paid by
the party who purchased the property.
Property Valuation: Lending institutions
will have their accredited property valuers conduct
a valuation of the property they are lending the money
for. This cost is usually passed onto the borrower.
Stamp Duty: Every homebuyer is required
to pay their State Government stamp duty on the purchase
value of the property, (this fee has now been waived
for 1st home buyers). This is charged on a sliding scale
based on the property value. Stamp duty amounts and
calculators vary state to state, and can be found on
your State Government Office of Revenue websites - www.osr.nsw.gov.au
Transaction Fee: Usually associated
with Mortgage Accounts i.e. Lines of Credit or Offset
Accounts. The fee is charged when you withdraw money
from the account. Most lenders offer a number of free
transactions per month, before they charge.
