General Info

Standard Loan Fees in the Mortgage Process

By admin ⋅ March 5, 2008 ⋅  Email this post ⋅  Print this post ⋅ Post a comment

There are a lot of fees involved in the Mortgage Process! Remember, the banks are out to make a profit and will milk you for money as much as they can over the life of a loan! How else do they make their billions of dollars ever year?!! Here is a short list of most of the fees you will encounter when establishing a mortgage.

Establishment

Establishment fees are charged by lenders to pay for the expenses of setting up a loan, such as valuations, legal fees etc. For most lenders the fee will be around $600 but this will vary between lenders and some may not charge one. Establishment fees can also be capitalized to the loan amount meaning they are not paid upfront by the applicant.

Administration Fees – monthly

Again depending on the lender and the loan type chosen, admin fees are usually around $8-$12 per month.

Stamp Duty

On land:

Whenever land is purchased in Australia, Stamp Duty is applicable and is a fee paid to the government. The amount varies between states and is based on the market value of the property or purchase price (whichever is greater). This usually gets paid by your solicitor/conveyancer on your behalf.

On mortgage documents:

Yes we also pay Stamp Duty on mortgage documents and is usually paid on your behalf by the lender. The amount varies from state to state and this fee can also be capitalized onto the loan amount.

Lenders Mortgage Insurance (LMI)

Insurance taken out by the lender to cover themselves in the event that the borrower defaults on their loan and the sale of the property in unable to cover the outstanding balance.
If you borrow greater than 80% of your security value (Lending Value Ratio 80%) then you will be liable to pay for LMI. Non-conforming institutions mortgage insurer every loan however is only payable over 80% LVR or depending on product chosen.
LMI protects the lender, not the borrower but is charged by every institution.

Legal (Conveyancing)

Always recommended and charges vary from state and in accordance to the conveyancer used. Your conveyancer will perform several checks including any building or strata title reports and a certificate of title check. Their fee will show a breakdown of all the individual items they have done in preparation for your mortgage.

Land Transfer

Land Transfer occurs every time property changes hands. A document known as a Land Transfer is lodged and registered with the Titles Office.
The cost varies from each state and your conveyancer will handle this fee on your behalf.

Registration of Mortgage Documents

A government charge to register the mortgage document. Usually paid on your behalf by the lender.