Loan Fees, Costs, and Third Party Charges

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 to accept a loan offer.

Enlisting the expert assistance from a RedCap Finance Broker may help ensure you aren’t hit with any surprise expenses and will make examining the vast array of loan 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.

Please note other property purchase costs that need to be budgeted for:- i.e. title transfer stamp duty, conveyancing fees, title insurance, property insurance, building inspection services, pest inspection services, service providers deposits (if applicable)

Loan upfront set up costs

• Application fees – payable at the time of application.
• Establishment/settlement fees – payable when the loan is settled.
• Loan documentation/Lender's legal fees – payable to cover the lender's cost of producing the loan documents.
• Valuation fees – payable to cover the lender's cost of assessing the value of your property.
• Lenders' Mortgage Insurance ("LMI") premiums – payable to cover the lender's cost for LMI premiums - when you have less than a 20% deposit. The smaller the deposit you can contribute - the higher the insurance premium cost will be that you will either pay upfront, or it may be added onto the loan amount in some cases.
• 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. However, the purpose you require the loan for - is more important than basing your decision on a low interest rate solely.
• 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.
• Deferred broker credit assistance fees – these fees are disclosed in the brokers' credit guide and may apply if you decide to pay out your loan early, usually within 0 to 2 years of establishing the loan. Contact your broker direct BEFORE refinancing or paying out your existing loan to find out ways to minimise these costs.