Costs of Getting a Home Loan in Australia

Getting a home loan in Australia seems like an easy and affordable way of finally owning a home. But did you know about the potential costs of getting a home loan in the first place?

To avoid being surprised by sudden costs and paperwork, it’s important that you know what they might be. It helps you understand what you’re getting into and also prepare and budget accordingly.

Here are all the costs associated with getting a home loan in Australia.

Lender Fees

When getting a home loan, you are not only required to compensate your lender with the loan’s interest, but also a few other fees and charges.

Most Aussies won’t see this coming, but yes, there are fees involved in addition to the interest that you must pay to the lender. Let’s take a look at what they are.

Application/Establishment Fee

An application fee (also called an establishment fee) is a one-off fee some lenders charge to set up your home loan. This usually ranges between $150 to $700 depending on the lender and complexity of your loan process.

It usually goes toward things like:

• Processing your application

• Credit checks

• Verifying your income and documents

• Preparing loan documents

• Setting up your loan account

Basically, it covers the lender’s internal work before settlement.

However, not all lenders charge it.

Ask your lender if they do. They would either charge it upfront, waive it completely, or remove it but charge higher ongoing fees instead. This is why you should also look at the comparison rate if you’re approaching multiple lenders.

Valuation Fees

A valuation fee is what the lender may charge to have your property professionally assessed before approving your home loan. They do this to confirm the property is actually worth what you’re paying for.

The outcome of a valuation determines:

• Your borrowing amount

• Your Loan-to-Value Ratio (LVR)

• Whether you pay LMI

It usually costs $100 to $1000, depending on the complexity, area, and location of the property being bought.

But again, not all lenders charge it. If your lender does, ask them if they can waive it for you.

Having a broker also helps, as they can potentially arrange the valuation at no cost. Koalify has done this for hundreds of fellow Aussie borrowers, and even helped from A to Z of the home loan process.

That includes searching, finding, and curating the most suitable home loans, and even handling most of the paperwork involved on their behalf.

And we do all of this at zero extra cost to borrowers.

Contact us today for free consultations!

Lenders Mortgage Insurance (LMI)

If your deposit is less than 20% of the property’s value, you’ll likely have to pay for LMI. It’s a type of insurance that protects the lender (not you) in case you fail to repay your home loan. 

The cost of LMI depends on your Loan-to-Value Ratio (LVR). So, the higher the LVR, the higher the LMI cost.

It’s a one-off premium. You can either choose to pay it fully upfront, or add it to your loan (which means paying interest on it).

There are LMI waiver schemes available, so you could potentially avoid paying LMI if you qualify the requirements.

Interest

Interest is the biggest long-term cost of getting a home loan. It’s the cost you pay the lender for borrowing money.

When you take out a home loan, you’re not just repaying the amount you borrowed (the principal). You’re also paying the lender for the use of that money, which is interest.

The interest rate varies by lender and other external factors. Home loan interest rate in Australia is around the 6% mark on average right now.

To minimise the interest you pay, you can make use of an offset account and choosing between fixed, variable, or split interest rate options.

It’s also worth noting that having a mortgage broker can help you find the most suitable rates possible, without having to pay any extra charges or commissions to the broker, since they work free of cost to borrowers.

Here at Koalify, we help Aussies dreaming of a home to search, curate, and get a mortgage by ensuring competitive interest rates and offers.

The best part is that our service is free of cost to you—zero hidden fees, consultation charges, or commissions whatsoever! 

And driven by ASIC’s Best Interests Duty, we guarantee to find you the most suitable home loan that fits your unique needs and goals. 

With our extensive panel of 30+ top lenders and 2,000+ mortgage solutions in Australia, you can unlock opportunities that you might miss otherwise. 

Interested? Contact us to get your dedicated mortgage advisor today!

Loan Features & Account Fees

Other miscellaneous lender charges include:

• Offset account fee: Around $200 to $400 per year, although free of charge with some lenders.

• Redraw fees: Around $20 per manual transaction processed by the bank staff, although it’s usually free for online banking transfers and variable loans (fully free of cost with some lenders as well.)

• Late payment fee: A penalty or fine levied upon delayed repayments.

• Discharge fee: A charge imposed by lenders when closing a home loan, either due to paying off a mortgage in full, selling the home, or refinancing to a new lender. Usually costs $330–$350 on average.

• Break cost: A fee charged by lenders when a fixed-rate home loan is ended early, refinanced, or altered before the term expires.

Government Charges

This is what you pay directly to the government when buying a property in Australia. While it’s not linked to getting a home loan alone, it’s worth knowing what it is and how it works if you’re getting a new property.

Stamp Duty

Stamp Duty is a state government tax you pay when buying property in Australia. It’s one of the biggest upfront costs after your deposit, costing thousands of dollars, and it’s paid at settlement.

This duty is set and collected by each state or territory government, which means:

• The amount differs depending on where you buy

• Rules and exemptions vary by state

• First-home buyer concessions depend on location

Stamp duty is not a flat rate either. It works on a sliding scale (the higher the property price, the higher the rate) and it’s based on:

• The property purchase price (or market value)

• Whether you're an owner-occupier or investor

• Whether you're a first-home buyer

• The state you're buying in

There are stamp duty concession for first-home buyers. Many states offer:

• Full exemptions under certain price thresholds

• Partial concessions above those thresholds

But it depends entirely on the state and property value, so make sure to check the state by state fees and concessions.

Transfer Registration Fee

A transfer registration fee is a state government charge for officially registering the property in your name after you buy it.

Essentially, it’s the fee charged by your state or territory land titles office to legally record you as the new owner on the land title.

Each state has its own pricing structure, and the fee is usually based on the property value. But it usually ranges from $125 to $450, arranged by your conveyancer/solicitor and paid at settlement.

Mortgage Registration Fee

A mortgage registration fee is a state government charge to officially record your lender’s interest on your property title.

It registers that the bank has a legal claim over the property until the loan is fully repaid. This is because when you take out a home loan, your lender will have security over it even though you own the property, until you pay off the loan.

So, registering the mortgage protects the lender if you default, allowing them to legally recover the debt.

The fee ranges from $120 to $240, varying by state and territory.

Legal & Transfer Costs

In order to arrange the payment of stamp duty, transfer fees, mortgage registration fees, etc., you would need to pay for the legal costs involved.

This is paid to your conveyancer or solicitor, who usually arranges these payments for you. Here’s how that works:

Conveyancing/Solicitor Fees

Conveyancing fees are what you pay a licensed conveyancer or property solicitor to handle the legal transfer of the property from the seller to you.

They basically make sure the property legally becomes yours, properly and safely, as they will:

• Review the contract of sale

• Check for legal issues (easements, zoning, restrictions)

• Conduct property title searches

• Liaise with your lender and the seller’s solicitor

• Calculate settlement figures

• Arrange payment of stamp duty

• Attend settlement (electronically or physically)

All of this protects you from legal mistakes that could cost thousands later.

Conveyancing usually costs $500 to $2500 on average, depending on your state, complexity of the contract,

Compare rates from multiple lenders

Let our home loan experts secure the most suitable deal for you

I want to refinanceI want to buy a home