If you’re a first home buyer in Australia, mortgage fees can be just as important as the interest rate—and often more confusing. Beyond the well-known application and valuation fees, many buyers are caught out by less obvious costs like rate-lock fees, state-based government charges, and exit costs that only appear later.
In this guide, written by an expert mortgage broker in Brisbane, we explain exactly what these fees cover, from upfront costs to hidden charges, and show you how to reduce them.
What Are Mortgage Fees?
Buying your first home involves more than just picking an interest rate. You must also budget for mortgage fees.
These are administrative charges lenders add to your loan. They cover the cost of setting up and managing your account.
Unlike interest, these fees are usually fixed amounts. You pay them at specific stages of your home loan journey.
Mortgage Fees vs. Loan Interest: What’s the Difference?
It is vital to distinguish between interest and fees to manage your budget effectively.
- Interest is the cost of borrowing money. It accrues daily on your outstanding balance.
- Mortgage fees are separate charges for specific services.
For example, a lender may charge a $600 application fee upfront. Alternatively, they might charge a $10 monthly account-keeping fee.
Interest affects your repayments over time. However, specific fees can hit your wallet immediately if you aren’t prepared.
The Three Main Categories of Home Loan Fees
We generally categorize these costs into three distinct groups.
1. Upfront Fees
Lenders charge these when you first apply for the loan. They cover the assessment of your application and property security.
- Application fees: Covers the processing of your paperwork.
- Valuation fees: Pays for a professional property assessment.
- Settlement fees: covers the legal setup of the mortgage
2. Ongoing Fees
These charges apply throughout the entire life of your loan.
- Service fees: Monthly or annual charges for account management.
- Feature fees: Costs for using offset accounts or redraw facilities.
- Package fees: Annual charges for bundled loan products.
3. Exit Fees
You pay these fees when you close your loan account. This happens if you refinance, sell, or pay off your mortgage in full.
- Discharge fees: Covers the administrative removal of the mortgage title.
- Break costs: substantial fees charged for exiting a fixed-rate loan early.
Read more: First homebuyer loans
Why Do Lenders Charge Mortgage Fees?
Lenders charge mortgage fees to recover the administrative costs of setting up your loan.
Processing a home loan application involves significant work behind the scenes. Lenders must verify your identity, check your credit history, and assess your financial stability.
Many of these tasks involve third-party providers. The fees you pay often reimburse the lender for these external expenses, including:
- Credit checks: Verifying your credit score and repayment history.
- Property valuations: Hiring independent valuers to assess the property’s worth.
- Legal preparation: Drafting mortgage documents and managing settlement contracts.
Assessing Lender Risk and LMI
Mortgage fees also reflect the level of risk the lender accepts by approving your loan.
This is most common when your deposit is smaller than 20% of the property value. In this scenario, you typically pay Lender’s Mortgage Insurance (LMI).
LMI protects the bank—not you—if you cannot repay the loan. While not paid directly to the lender, it remains a key part of Australia’s lending fee structure.
How a Mortgage Broker Reduces Your Costs
You do not always have to accept advertised mortgage fees at face value.
Many lenders are willing to waive or reduce specific fees to win your business. This is where a professional mortgage broker becomes a valuable asset.
Brokers have the experience and industry contacts to negotiate better deals on your behalf.
At Hunter Galloway, we review every fee in your contract. We work to minimize your upfront and ongoing costs without compromising the quality of your loan.
Take Control of Your Home Loan
Understanding why these fees exist puts you in the driver’s seat.
You can budget accurately and avoid nasty financial surprises at settlement. With the right information, you can secure a loan that fits your long-term financial goals.
Mastering these costs is a smart step toward buying your first home in Australia with confidence.
Common Types Of Mortgage Fees In Australia
We can break down mortgage fees into three clear categories. Knowing these helps you budget effectively for your new home.
1. Upfront Fees
You pay these fees at the very start of your journey. They cover the cost of getting your loan approved and settled.
- Loan application fee: This covers the lender’s administrative work to process your application. It typically costs between $0 and $600. However, many lenders waive this fee for new customers or if you use a mortgage broker.
- Property valuation fee: Banks need to know exactly what your new home is worth. They hire an independent valuer to check the property’s security value. Expect to pay between $200 and $600 for this report.
- Settlement fee: This fee applies on the day you officially take ownership of the property. It covers the administration of registering your mortgage and releasing the funds. These fees usually range from $100 to $400.
- Lender’s legal fees: Some banks charge you for the legal work required to prepare your loan contract. While many fold this into the application fee, others charge it separately. Costs generally sit between $200 and $400.
2. Ongoing Fees
These are the maintenance costs of holding a mortgage. They might seem small, but they add up over time.
- Monthly service fees: Lenders charge this to keep your loan account active. It typically costs $5 to $15 per month. Fortunately, many basic loans do not charge this fee.
- Annual package fees: If you bundle your loan with a credit card or offset account, you might pay an annual fee. This usually costs between $300 and $400 per year. Always check if the package benefits outweigh this cost.
- Offset account fees: An offset account can save you thousands in interest. However, some lenders charge a monthly fee of around $10 to maintain it. Ensure the interest you save is higher than the fee you pay.
- Redraw facility fees: This fee applies when you withdraw extra money you have paid into your loan. Some lenders charge a small fee per transaction. Others offer this feature for free, so check your loan contract.
3. Exit Fees
You pay these fees when you close your loan account. This happens if you sell your home, refinance, or pay off your debt.
- Discharge fees: This administrative fee covers the cost of removing the bank’s mortgage from your property title. Most lenders charge between $150 and $600 for this service.
- Break costs: These apply if you exit a fixed-rate loan before the fixed term ends. The cost depends on interest rate movements and can be substantial. Always ask for a quote before switching or refinancing a fixed loan.
- Early repayment fees: Some older loans charge a penalty if you pay off your debt ahead of schedule. However, most modern variable-rate loans do not have this fee.
Less Obvious Mortgage Fees That Can Catch You Out
While application fees get the spotlight, “hidden” mortgage fees often fly under the radar.
These charges can appear during settlement or even years later. Being aware of them ensures your budget stays on track.
Rate Lock Fee
This is crucial if you are applying for a fixed-rate home loan.
Interest rates can change between your approval and settlement day. You can pay a fee to “lock in” your quoted rate for 90 days.
- Cost: Typically 0.15% of the loan amount or a flat fee of $395 to $750.
- The Risk: Without it, you might settle on a higher rate if the market moves.
Document Preparation Fee
This covers the administrative cost of drawing up your loan contract.
Some lenders bundle this into the application fee. Others charge it as a separate item.
- Cost: Generally between $200 and $300.
- Action: Check your loan offer letter to see if this fee applies to you.
Title Search Fees
These are small government costs passed on by the lender.
The bank performs a search to verify who owns the property before lending money.
- Cost: Usually nominal, around $20 to $50 per search.
- Warning: These costs accumulate if you make offers on multiple properties that don’t proceed.
Guarantor Fees
Are you using a family pledge or guarantor loan to avoid LMI?
This loan structure is complex because it involves a second property title.
- Cost: Lenders often charge an extra $200 to $400 to process the guarantor’s paperwork.
Late Repayment Fees
These are avoidable penalties charged if you miss a mortgage payment.
- Cost: Typically $15 to $35 per event.
- Impact: Repeated dishonour fees can damage your credit score. This affects your ability to refinance later.
- Tip: Schedule your direct debit for the day after your pay cycle.
Loan Portability Fees
You might want to keep your existing loan when you move house.
This is called “porting.” It involves swapping the security property from your old home to your new one.
Cost: Lenders charge a “substitution of security” fee, often $200 to $400.
Online Lenders vs. Major Banks
Fee structures vary significantly between lender types.
- Major Banks: Often charge higher package fees (e.g., $395/year) but offer greater flexibility.
- Online Lenders: Often advertise “zero monthly fees” but charge strictly for ad-hoc services.
You might pay extra for manual valuations or loan variations with online lenders. Always consider the type of service you need, not just the headline rate.
Government Fees and Charges
When budgeting for a home loan, you must look beyond lender fees.
Government charges are unavoidable costs of buying property in Australia. You need to budget for these just like your deposit.
While lenders do not charge these directly, they can significantly impact your upfront cash requirements.
Stamp Duty (Transfer Duty)
Stamp duty is often the single biggest upfront cost for homebuyers.
This is a state government tax on your property transaction. Rates vary depending on where you buy and the property’s value.
- Queensland: Offers generous concessions. As of May 2025, first home buyers pay zero duty on new homes or vacant land to build.
- New South Wales: Calculates duty on property value, with exemptions for first home buyers up to $800,000.
- Victoria: Provides exemptions for first homes up to $600,000 and concessions up to $750,000.
Knowing your state’s specific rules can save you tens of thousands of dollars.
Registration Fees
You must also pay to register your new ownership with the government.
The Land Titles Office in your state charges these fees to update the property title.
- Mortgage Registration Fee: covers the cost of registering the bank’s interest on your title. In Queensland, this is approximately $240.
- Transfer Fee: covers the legal transfer of the property into your name. This fee scales with the property price and can exceed $1,000.
First Home Buyer Exemptions and Concessions
If you are a first home buyer, you might not have to pay full price.
Most states offer significant incentives to help you enter the market.
- QLD: Uncapped duty exemption for new builds (effective May 2025).
- NSW & VIC: Sliding scale concessions for established homes.
- Federal: The First Home Guarantee now has higher price caps (e.g., $1 million for Brisbane).
Check your eligibility early. These concessions can drastically reduce the cash you need to settle your loan.
Mortgage Fees by State
Government charges are not uniform across Australia.
Because property laws are state-based, the fees you pay depend entirely on where your new home is located.
Below is a breakdown of the key differences for 2025/26.
Mortgage Registration Fees
This is a flat fee charged by the Land Titles Office in your state to register the bank’s interest on your property title.
State | Fee (Approximate) |
QLD | $238 |
WA | $217 |
SA | $198 |
NSW | $176 |
VIC | $126 |
Title Transfer Fees
Unlike the registration fee, the transfer fee usually scales with your property’s value.
- How it works: The more expensive the property, the higher the fee.
- Budgeting: Expect to pay between $1,000 and $2,500 for most median-priced homes.
Example: In Queensland, the transfer fee on a median home is often over $1,000, whereas in Victoria, it is calculated using a sliding scale based on the purchase price.
First Home Buyer Stamp Duty Thresholds
State governments offer different concessions to help first home buyers enter the market.
- QLD: Zero stamp duty on new homes (uncapped) effective May 2025. For existing homes, full exemption up to $700,000.
- NSW: Full exemption for new and existing homes valued up to $800,000. Concessions apply up to $1 million.
- VIC: Full exemption for homes up to $600,000. Concessions apply up to $750,000.
- WA: Full exemption for homes generally up to $450,000, with concessions phasing out at $600,000.
- SA: Zero stamp duty for eligible first home buyers building or buying a new home (uncapped).
Why Do These Fees Differ?
These are state taxes, not federal ones.
Each state government sets its own revenue targets and housing policies. This is why a first home buyer in Brisbane pays a completely different amount than one in Melbourne for the exact same property value.
Lender's Mortgage Insurance (LMI)
Besides standard fees, Lender’s Mortgage Insurance (LMI) is often the largest cost for first home buyers.
Understanding how LMI works can save you thousands. It is crucial to know exactly what you are paying for.
What Is Lender's Mortgage Insurance?
LMI is an insurance policy that protects the lender, not you.
It covers the bank if you default on your repayments and the property sells for a loss.
It is important to note that LMI is an insurance premium, not an administrative fee. It secures the lender’s risk, not your financial future.
When Do You Pay LMI?
Lenders generally require LMI if your deposit is less than 20% of the property value.
This means you are borrowing more than 80% of the home’s price (Loan to Value Ratio).
First home buyers often face this cost to enter the market sooner. The smaller your deposit, the higher the risk to the bank, and the higher the premium.
How Much Does LMI Cost?
The cost of LMI varies significantly between lenders. It depends on your loan amount and the size of your deposit.
- Typical Cost: Premiums usually range from 1% to 4% of your total loan amount.
- Example: On a $400,000 loan with a 10% deposit, LMI could cost between $4,000 and $16,000.
- Capitalisation: Most borrowers add this cost to their loan rather than paying upfront. This means you pay interest on the insurance premium for the life of the loan.
How to Avoid Paying LMI
You do not always have to pay this insurance. There are three proven strategies to avoid it:
- Save a 20% deposit: This eliminates the lender’s need for insurance entirely.
- Use a Guarantor: A guarantor loan uses a family member’s property as extra security. This lowers your risk profile and removes LMI costs.
- First Home Guarantee Scheme: Eligible buyers can purchase with a 5% deposit and pay $0 in LMI through this government scheme.
Manage LMI with a Mortgage Broker
LMI policies and premiums differ across every bank in Australia.
A mortgage broker like Hunter Galloway can compare these costs for you. We help you calculate the exact premium and structure your loan to minimise or avoid it.
Optional (But Common) Third-Party Costs
You shouldn’t just budget for lender fees and government charges.
Third-party costs are crucial for a smooth property transaction. While sometimes optional, they protect your investment from costly mistakes.
Conveyancing or Solicitor Fees
Conveyancing is the legal process of transferring ownership from the seller to you.
You will need a solicitor or conveyancer to handle the paperwork. They review contracts, manage the settlement, and protect your legal interests.
- Typical Cost: Fees generally range from $800 to $2,000.
- Why it matters: Qualified professionals help you avoid legal pitfalls that could delay settlement.
Building and Pest Inspections
Always arrange inspections before you sign an unconditional contract.
These reports reveal hidden problems like structural damage or termite infestations. Finding these issues early can save you thousands in future repairs.
- Typical Cost: a thorough combined inspection usually costs between $300 and $600.
- Why it matters: It gives you bargaining power if the property needs repairs.
Home and Income Protection Insurance
Lenders usually require Building Insurance before settlement.
They need to know their security is protected from fire, storms, and theft. You must provide a certificate of currency to settle the loan.
Income Protection Insurance is not mandatory, but it is a smart safety net. It covers your mortgage repayments if illness or injury stops you from working.
Mortgage Broker Fees (If Applicable)
Many mortgage brokers do not charge you a fee.
At Hunter Galloway, our service is generally free for standard residential loans. We are paid a commission by the lender after your loan settles.
However, some brokers charge a fee for specific situations:
- Complex loans: Such as bad credit or complex self-employed structures.
- Small loans: Where the lender commission doesn’t cover the broker’s time.
Always ask about fees upfront. You should know exactly what you are paying for before you proceed.
Comparing Mortgage Fees Between Lenders
Finding the right home loan requires more than just chasing the lowest interest rate.
You must compare the full fee structure to understand the true cost.
Fees can add up quickly. A “low rate” loan might cost more if it has high ongoing charges.
Here is how you can make a smart comparison.
Use the Comparison Rate
The comparison rate is your best tool for spotting expensive loans.
It combines the headline interest rate with most upfront and ongoing fees into a single percentage.1
- Headline rate: The interest you pay on the balance.
- Comparison rate: The true annual cost of the loan.
If the comparison rate is much higher than the headline rate, the loan likely has high fees.
Request a Key Facts Sheet
Australian law requires lenders to provide a Key Facts Sheet for every home loan product.2
This document follows a standard format. It clearly outlines the interest rate, total cost, and every fee involved.
Request this sheet before you sign anything. It allows you to compare different lenders “apples to apples” without confusing marketing jargon.
Use Online Comparison Tools
Online calculators can save you time.
They allow you to filter loans by fee type, interest rate, and lender features.
However, use these tools as a starting point only. Third-party websites may not always show the most up-to-date special offers or negotiated discounts.
Beware of "Fee-Free" Claims
Be cautious of loans advertised as “fee-free.”
Lenders still need to make a profit. Often, a loan with zero fees comes with a higher interest rate.
Over 30 years, a slightly higher interest rate can cost you much more than a small annual fee.
Always calculate the total cost of borrowing—fees plus interest—before you make a decision.
A mortgage broker can run these numbers for you to reveal the best long-term value.
How To Reduce Or Avoid Mortgage Fees
Mortgage fees add up fast. This creates extra pressure when you are already managing deposits and government charges.
The good news is you do not have to pay full price.
You can reduce or avoid these costs with a proactive approach. This can save you thousands over the life of your loan.
Negotiate with Your Lender
You should never accept the first offer. Mortgage fees are often negotiable.
Lenders want your business, especially if you have a strong financial profile.
- Ask for waivers: Request they drop the application or valuation fee.
- Use leverage: Mention competitors offering lower fees to get a better deal.
A simple email or phone call can often secure a discount.
Look for Package Loans
Some lenders bundle home loans with other products. This might include a credit card or an offset account.
These “Professional Packages” often waive ongoing monthly fees in exchange for a single annual fee.
- The Benefit: You get premium features and rate discounts for a flat fee.
- The Risk: Ensure the annual fee is cheaper than paying for services separately.
Take Advantage of Cashback Offers
Lenders often use cashback deals to attract new customers.
They might refund your settlement costs or provide a cash bonus after the loan starts.
- Offset costs: Use the cash to cover legal fees or moving expenses.
- Compare rates: Do not choose a higher interest rate just for a quick cash bonus.
Use a Mortgage Broker to Find Low Fees
Finding low-fee loans is difficult on your own. A mortgage broker makes it easy.
We have access to thousands of loan products. We know which lenders are currently waiving fees.
Brokers also have the industry clout to negotiate discounts you might miss. We save you time and reduce your stress.
Quick Tips to Save More
- Combine fees: Ask if valuation and application costs can be bundled.
- Review annually: Call your bank every year to see if you can switch to a cheaper product.
- Hardship waivers: If you struggle financially, ask your lender to pause fees temporarily.
Which Mortgage Fees Can Be Added To Your Loan (And When It Makes Sense)
Buying a home is expensive. To manage cash flow, many buyers ask if they can add fees to their loan balance.
This strategy is called capitalising your fees. It means borrowing the money to pay the fee rather than using your savings.
However, lenders have strict rules about which costs can be added and which ones you must pay upfront.
Fees You Can Commonly Capitalise
Lenders generally allow you to add specific lender-charged fees to your mortgage.
- Lender’s Mortgage Insurance (LMI): This is the most common fee to capitalise. Because LMI can cost thousands, most borrowers add it to the loan.
- Application & Valuation Fees: Some lenders allow you to add these small administrative costs.
- The Catch: You can usually only do this if you have enough “equity” room. The total loan amount (plus fees) must normally stay within the lender’s maximum Loan-to-Value Ratio (LVR).
Note: LMI is often the exception. Many lenders allow you to capitalise LMI even if it pushes your loan above the standard LVR limit (e.g., borrowing 95% + LMI).
Fees You Must Pay Upfront
You cannot add everything to your mortgage. You need cash savings for third-party and government costs.
- Stamp Duty: This is a state tax and must be paid from your own funds.
- Government Registration Fees: You cannot borrow these costs.
- Conveyancing Fees: Your solicitor requires direct payment for their services.
- Building & Pest Inspections: You pay these providers directly before settlement.
The Cost of Capitalising Fees
Adding fees to your loan saves you cash today, but it costs more in the long run.
When you capitalise a fee, you pay interest on that amount for the next 30 years.
Example:
Imagine you add a $10,000 LMI premium to your loan at an interest rate of 6%.
Over a 30-year term, that $10,000 will cost you an additional $11,500 in interest.
The total cost of that fee effectively doubles to $21,500.
When Is It a Smart Strategy?
Despite the extra interest, capitalising fees often makes financial sense for first home buyers.
- Market Entry: It allows you to buy a home sooner with a smaller deposit.
- Cash Buffer: It preserves your savings for moving costs, furniture, or emergencies.
- Opportunity Cost: Paying the extra interest is often better than waiting years to save the fee in cash while property prices rise.
However, if you have ample savings, paying fees upfront is the cheapest option. It keeps your loan balance lower and saves you thousands in future interest.
True Cost Of Mortgage Fees Over Time
t is easy to fixate on the lowest interest rate when choosing a home loan. However, you must look closer at the true cost over the life of the loan.
Fees—whether upfront, ongoing, or exit—can drastically change your total repayments.
Knowing how these costs accumulate helps you make a smarter financial decision.
Case Study: Low Rate vs. No Fees
Let’s compare two hypothetical loans for $850,000 paid off over 30 years.
- Loan A: Lower interest rate of 5.0% but charges $600 upfront and a $10 monthly fee.
- Loan B: Slightly higher rate of 5.1% but has $0 upfront and $0 ongoing fees.
We calculated the total cost to see which loan wins.
Loan A – The “Low Rate” Option
- Monthly Repayment: ~$4,563
- Total Repayments (30 years): $1,642,680
- Total Fees ($600 + $10/mth): $4,200
- Grand Total: $1,646,880
Loan B – The “No Fee” Option
- Monthly Repayment: ~$4,615
- Total Repayments (30 years): $1,661,400
- Total Fees: $0
- Grand Total: $1,661,400
The Verdict:
Loan A is cheaper. Despite the fees, the lower interest rate saves you approximately $14,520 over 30 years.
However, if you refinance or sell within a few years, the upfront costs of Loan A might make it more expensive.
Long-Term Impact on Your Wallet
Mortgage fees do more than just sting your bank account today.
They inflate your effective loan cost over decades. Even small fees, when multiplied by 360 months, add thousands to your total bill.
A loan with zero upfront fees might actually cost more in the long run if it has higher ongoing charges.
How Small Ongoing Fees Add Up
Ongoing fees often look harmless. A $10 monthly service fee seems like the cost of two coffees.
But over a 30-year mortgage, that small fee adds up to $3,600.
This doesn’t even account for the interest you could have saved by putting that money into your mortgage.
Key Takeaway:
Always look beyond the “Fee-Free” marketing.
You need to understand the cumulative effect of every dollar you pay.
If you want a clear breakdown, a mortgage broker can model these scenarios for you. We help you find the loan that offers the best long-term value, not just the lowest fees today.
Frequently Asked Questions About Mortgage Fees For First Home Buyers
Can mortgage fees be added to my home loan?
Yes, some fees like LMI and certain upfront lender fees can often be added to your loan balance, increasing repayments slightly over time.
Do online lenders charge fewer mortgage fees than banks?
Many online lenders offer lower or zero ongoing fees, but may offset this with higher interest rates or fewer loan features.
What mortgage fees are excluded from the comparison rate?
Comparison rates usually exclude break costs, redraw fees, late payment fees, and some optional features.
Are mortgage fees refundable if my loan is declined?
Most application and valuation fees are non-refundable, even if your loan doesn’t proceed.
Are mortgage fees higher for construction loans?
Yes, construction loans often include progress inspection fees and multiple valuation costs.
Do first home buyers get discounts on lender fees?
Some lenders waive application or valuation fees for first home buyers as part of promotional offers.
Are mortgage broker fees paid upfront?
Most brokers are paid by the lender, but some complex loans may involve an upfront or success fee.
Do mortgage fees change when refinancing?
Yes, refinancing usually triggers discharge fees and potentially new application or valuation fees with the new lender.
Final Thoughts: Don't Let Mortgage Fees Catch You Off Guard
Understanding mortgage fees is just as vital as comparing interest rates.
From application costs to ongoing service charges, every dollar impacts your budget. These fees can add thousands to your loan over time if you aren’t careful.
Don’t be afraid to ask questions.
First home buyers should always read the fine print. Remember, some fees are negotiable or can be waived with the right leverage.
Before you commit, get pre-approval and speak to a professional. A mortgage broker helps you compare the true cost of different lenders to find the best deal.
Let Us Handle the Details
You don’t have to navigate this maze of fees alone.
At Hunter Galloway, we help you buy your home with confidence. Unlike one-person operations, we have a dedicated team of experts to make your journey simple.
We will review every fee, negotiate with lenders, and ensure you get the best possible value.
Ready to get started?
Give us a call on 1300 088 065 or book a free assessment online today. Let’s make your home ownership dream a reality.
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