Home Loan Costs and Fees in Australia — Complete Guide (2026)

Home Loan Costs and Fees in Australia — Complete Guide (2026)

Australian home loans come with a range of fees — charged by lenders upfront, annually, and at the end of your loan. Some fees are unavoidable; others can be waived or avoided with the right loan product. Understanding every fee before you sign is essential for comparing loans on a true total-cost basis.

Upfront Lender Fees

Loan Application Fee

An application fee (also called an “establishment fee” or “loan processing fee”) is charged by some lenders when you apply for a home loan.

Can you avoid it? Yes — many competitive lenders charge no application fee. When comparing loans, always check this fee. A $600 application fee on a 30-year loan is relatively minor, but unnecessary.

Valuation Fee

Your lender needs to value the property before approving your loan. This is an independent valuation of the property to confirm it is worth the purchase price.

Upvaluation risk: If the valuation comes in below the purchase price, your borrowing capacity is reduced. This is more common for properties in volatile markets or auction conditions.

Settlement Fee

Charged for the settlement process — coordinating the final transfer of funds and title.

• Typically $100–$300
• Often included with conveyancing costs or charged separately by the lender

Legal Documentation Fee

Some lenders charge for preparing the mortgage documentation.

• Typically $100–$250
• More common with specialist lenders

Ongoing Lender Fees

Monthly or Annual Loan Fee

Many standard home loan products — particularly package loans — charge an annual fee in exchange for a discounted interest rate and bundled features.

Are package fees worth it? A $395/year package loan fee may be worthwhile if:

• The rate discount vs a no-fee loan is at least 0.1–0.2% per year, AND
• The package includes valuable features (offset account, credit card, insurance discount)

On a $500,000 loan, a 0.2% rate difference = $1,000/year in interest savings — well above the $395 fee. On a $250,000 loan, the maths is tighter.

Offset Account Fee

• Most modern variable rate loans include an offset account with no separate fee
• Some loans charge $5–$10/month for an offset account
• Fixed rate loans rarely include a true offset account — check the terms carefully

Redraw Fee

• Most loans now offer free redraw
• Some older or basic loans charge $15–$30 per redraw
• Check the redraw conditions — some lenders impose minimum redraw amounts ($1,000+) or processing delays

Exit and Refinancing Fees

Discharge Fee

Payable when you pay off your mortgage or refinance to a new lender. The discharge fee covers the administration of releasing the mortgage from the property title.

• Typically $150–$400
• Cannot be avoided when exiting a loan
• Some lenders waive or reduce the discharge fee as a retention incentive

→ See Discharge Fees Explained

Fixed Rate Break Cost (Early Repayment Charge)

If you have a fixed rate loan and repay more than allowed (sell, refinance or pay off), a break cost may apply. Break costs can be significant — sometimes $10,000–$30,000+ — because they compensate the lender for the cost of re-deploying funds at a lower rate.

Break costs are not a fixed fee — they depend on:

• The remaining fixed period
• The size of the loan
• The movement in wholesale interest rates since you fixed

→ See Early Repayment Charges on Fixed Rate Loans

Mortgage Discharge Registration Fee

At settlement of the discharge, the state land registry charges a fee to remove the mortgage from the title. Typically $100–$300 depending on state.

Government Fees (Not Lender Fees)

These are charged by state governments and land registries — not your lender:

Fee Comparison — Common Loan Types

True Cost of a Home Loan — Rate vs Fees

The advertised interest rate is not the full story. The comparison rate is designed to show the true cost including fees, but it has limitations (it assumes a $150,000 loan over 25 years — not realistic for most buyers).

Better approach: Calculate total cost over your expected loan term.

Example: $600,000 loan, 5-year hold:

• Loan A: 6.10% p.a., $0 annual fee
• Loan B: 5.95% p.a., $395 annual fee

Interest cost over 5 years (approximate):

• Loan A: ~$175,000
• Loan B: ~$171,000 interest + $1,975 fees = ~$172,975

Loan B is slightly cheaper in this example. But if you hold for only 2 years (or refinance), the advantage shrinks. Fees matter less on large loans over long periods — they matter more on small loans or short holds.

Fees to Always Check Before Signing

1. Application/establishment fee
2. Annual or monthly package fee
3. Offset account fee (if applicable)
4. Fixed rate break cost (for fixed loans)
5. Discharge fee
6. Redraw conditions and fees
7. Early repayment restrictions (especially on fixed loans)

Related Guides

• Total Cost of Buying a House in Australia
• Hidden Costs of Buying a Home
• Discharge Fees Explained
• Early Repayment Charges — Fixed Rate Loans
• LMI Explained
• Home Loan Costs Hub

This article provides general information about home loan fees. Fees vary by lender and change regularly. Always read the loan terms and conditions, key facts sheet and comparison rate. For advice tailored to your situation, speak with a licensed mortgage broker or financial adviser. Find one through MoneySmart.