When applying for a loan, you will most likely be liable for a range of fees and charges in relation to that loan. Make sure you are aware of all of them before making your decision.
Enlisting the expert assistance of a PLAN Australia mortgage broker may help ensure you aren’t hit with any surprise expenses and will make trailing through the array of products and their associated fees a lot less work. Below are just a few examples of upfront set up costs, ongoing costs and discharge fees that you should consider and plan for, when applying for a loan.
Upfront Set Up Costs
Application Fees
Payable at the time of application
Loan Documentation/Lender’s Legal Fees
Payable to cover the lender’s cost of producing the loan documents
Establishment/Settlement Fees
Payable when the loan is settled
Lenders’ Mortgage Insurance (“LMI”) Premiums
Payable to cover the lender’s cost for LMI premiums
Valuation Fees
Payable to cover the lender’s cost of assessing the value of your property
Mortgage Registration, Transfer Fees & Mortgage Stamp Duty
Payable to the applicable state government
Ongoing Costs
Interest
This is an most important cost to consider in your mortgage purchase decision. The interest rates offered by different lenders are highly competitive and may vary considerably. Different rates may apply depending on the product that you select and even a small difference may enable you to save substantial amounts of money over the life of the loan.
Account Keeping Fees
Some lenders charge a fee, usually monthly, to operate your loan account.
Annual facility fee – Some lenders charge an annual fee for your loan account, or for a package of different financial products.
Transaction Fees
Some lenders charge fees when you transact via your loan account. These fees might be to withdraw extra money (for example, redraw fees or EFTPOS/BPay transactions), or to pay extra money into your loan account.
Penalty Charges
Many lenders impose penalties under certain circumstances. These include fees for missing a scheduled loan repayment and making an inward payment that is dishonoured. Penalty interest rates generally apply if you have missed scheduled repayments.
Discharge Costs
Lender’s Discharge Fees
These fees cover the lender’s cost of paying out your loan.
Deferred Establishment Fees
These fees may apply if you decide to pay off your loan early, usually within 3 to 5 years of establishing the loan. The fees are generally calculated as a % of the initial loan amount and sometimes reduce over time. The costs can be substantial; therefore you should consider them carefully if it is possible that you will pay off the loan within 5 years.
Discharge Registration Fees
These government fees are charged for the releasing the mortgage/s held against your property.