Home loan costs explained
The true cost of a mortgage
When you borrow money to buy your home, the home loan provider will charge you interest on the amount you borrow and may also charge you fees to manage your loan. In addition, other fees (such as establishment fees, transactional fees and government charges) may also be payable.
To help you compare interest cost, all lenders and brokers must provide comparison rates in their advertisements, marketing collateral and at the time they hand you a loan application form.
The comparison rate is based on a $150,000 loan paid off over 25 years and is desgined to capture all the costs of a particular loan, including fees and charges. Therefore, it takes into account all of the costs associated with setting up a loan including the interest rate, establishment fees and any other up-front or ongoing fees.
A comparison rate doesn't include government fees and charges or any fees that rely on certain events occurring, or that are not able to be determined at the time of calculation.
Home loan fees
In addition to your interest rate, your home loan provider may charge fees for some of the services provided with your home loan. These fees will be disclosed in your loan contract. You should talk to your home loan provider for full details on what these fees are.
Other charges to consider
As well as your home loan costs, there are other fees and charges associated with buying a property you need to consider.
Some of these fees and charges may include the following:
- Government charges - These fees vary depending on the state or territory your property is located in and can include:
- Stamp Duty on the property and the loan. Use our Stamp Duty calculator as a guide.
- Mortgage Registration Fee and Transfer Fee.
- Mortgage duty.
You may be able to access the First Home Owners Grant and, in some states and territories, relief from some stamp duty costs if you're purchasing your first home. Your lender will be able to provide you with these details and the application forms, or you can download the application forms from the relevant office of state revenue website.
- NSW: www.osr.nsw.gov.au
- SA: www.revenuesa.sa.gov.au
- QLD: www.osr.qld.gov.au
- NT: www.revenue.nt.gov.au
- ACT: www.revenue.act.gov.au
- TAS: www.treasury.tas.gov.au/tax
- VIC: www.sro.vic.gov.au
- WA: www.osr.wa.gov.au
- Legal and conveyancing fees - These fees can vary widely, so you should agree to these costs up front. The fee may include:
- Solicitor or conveyancer fees for reviewing the purchase contract and advising you on your loan documents.
- Pest and property inspection fees.
- Strata records inspection fees (if applicable).
- Costs associated with property surveys and searches that may be required.
- Lender's Mortgage Insurance (LMI) - Lender’s Mortgage Insurance is generally required if your deposit is less than 20 per cent of the purchase price of the property. This cost is usually required upfront or may be added to the loan in some situations. An estimate of how much this will cost can be provided by your lender after you have submitted your loan application.
- Moving and miscellaneous costs - There are various costs associated with moving that you may incur. These include the cost of a removalist, connection fees for services, carpet cleaning, changing locks, urgent repairs, Home and Contents insurance and adjustment of council rates.
- Strata levies and council rates.
- Electricity, water, gas and phone fees.
