All that you Need to Know about Home Loan Fees and Related Expenses

While you are already spending a sufficient amount on your desired home, you must try to save from every hook and corner possible. An investment as big as yours would definitely ask for a lot of cost-cutting and penny-pinching.

You must make sure that the money and efforts that you invest in the purchase of your property do not go down the drain.

Going through the procedure, you should avoid as many expenses as you can. While there are some expenses that can be kept away with, there are some others that you cannot skip. When choosing the right mortgage deal, you must consider not just the interest rate but also the fees that come along with it. To keep you aware of the costs that you would be incurring while buying the house of your desire, Your Finance Adviser brings to you the Ultimate Guide to all your Home Loan expenses.

1. Application cost: An expense of $200 to $700, depending upon the lender, Application cost could be a part of your establishment, start-up or set-up fees. This is, however, a one-off charge, to be paid at the start of the home loan application. As a special promotion, some Lenders also waive this charge on their mortgage products.

2. Valuation fee An expense of $100 to $300, depending upon the location of the property, the Valuation fee covers the cost of an assessment of your property by a third property/valuer. This third party valuation allows the lenders ascertain whether the amount that you are willing to pay for the property is in line with market value. Generally valuation cost is covered by most of the lenders. .

3. Conveyancing charges: An important expense in the process of Loan Settlement is Conveyancing charges Conveyancing charges are estimated by the Conveyancer depending on your property and amount of work involved. These charges include the costs involved in the transfer of the property’s titles from the vendor to you and conveyancer fee. These charges may lie between 1200 and $2500.

4. Government fees/Stamp Duty: Varying on the basis of location (State), cost of the property, and whether you are a first home buyer or not, the Stamp Duty is charged by and payable to the Government as an expense on the mortgage.

5. Lender’s Mortgage Insurance: If you are borrowing an amount more than 80% of the value of your property, you will be liable to pay Lender’s Mortgage Insurance (LMI) to your lender. This amount works

in favor of the Lender in situations when the borrower fails to repay the home loan. It’s a one off insurance and it can be capitalized. LMI is paid in direct proportion to the value of your property.

6. Ongoing costs: There are certain Ongoing costs on some loans that need to be paid on a monthly or annual basis. These costs include-

* Monthly Service Fee, ranging from $5 to $15; covering the administration and servicing of your loan.

* If you have borrowed a Package Home Loan with a special discount on the interest rate, your Lender will charge you an Annual fee, ranging from $300 to $400.

* Your Lender might charge you with Repayment charges if your agreement is such that you would make some extra repayments to settle your loan earlier than expected.

* Making extra repayments and withdrawing them using a redraw facility entails a Redraw fee. Some banks offer this feature for free while others charge ranging between $10 to $25 per redraw

* Banks and other lenders may charge you for paying beyond your cut-off date, known as the Late Payment Cost.

* Switching fee is charged when you decide to switch from a variable interest rate loan to fixed interest rate product or vice versa.

* Portability fee covers the transfer of your home loan from one property to another.

* Discharge fee is charged when you end your deal with your lender either due to the settlement of the home loan, refinancing, or transferring to another bank. Discharge fee covers the completion of the mortgage process and paperwork.

 

The fee charged varies from lender to lender. While borrowing a Home Loan in Australia, you must make sure that your Lender is renowned and trustworthy. There are certain banks that waive off some fee while others charge their clients for the same.

The Lending specialist from Your Finance Adviser will offer you the best Home Loan rates and will guide you in the right direction throughout.