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What is the total cost of a home loan?

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When you apply for a home loan, it's good to be aware of the upfront fees and charges so you're not caught off-guard. Many of these extra costs can be avoided or negotiated out of your loan contract by your Home Loan Specialist and help save you a pretty penny.

What are the upfront costs of a home loan?

Before you get a home loan, there are a few upfront costs that you may need to prepare for and take into account when budgeting to buy a home. These may include:

  • Deposit — If you're purchasing a property, this is the big one. Your deposit is a percentage of the purchase price. Many buyers aim to save at least 20% of the property's purchase price in order to avoid paying Lenders Mortgage Insurance. It's always beneficial to put up the largest deposit you can reasonably afford so to lower your loan to value ratio (LVR). From the lender’s perspective, a low LVR lowers your risk as a borrower and strengthen your borrowing power.
  • Application or establishment fee — A one-off payment to your lender is usually required to establish a home loan. Depending on your lender, you can sometimes negotiate to avoid this fee.
  • Lenders Mortgage Insurance (LMI) — If your deposit is less than 20% of the property's purchase price, you may be required to pay LMI. It's important to remember that this insurance only protects the lender in case you fail to make your home loan repayments. Use our LMI calculator here.
  • Stamp duty / transfer duty — You will need to pay this state tax at a rate according to the property value when you purchase a home. Depending on your state or territory, you may be able to avoid paying this fee if the property is worth less than $600,000. Read our guide to stamp duty here.
  • Legal and conveyance fees — When purchasing a property, you'll typically need a solicitor or conveyancer to help review contract and the title transfer.
  • Building inspection — A qualified building inspector will assess the property for safety and maintenance issues.
  • Foreign buyer surcharge — If you are a foreign buyer in Australia, you will need to pay surcharge purchaser duty and surcharge land tax.
  • Moving and cleaning costs — You may want to shop around and get quotes for these services that can help make the move into your new home easier.

Will you need to pay LMI?

See how much you might need to pay if you're low on a deposit.

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How much will my repayments cost?

The terms of your home loan determine the repayment amount you'll be required to pay each month. This depends on a number of factors including your interest rate, your loan amount and whether your loan is:

  • A principal and interest or interest-only loan
  • Fixed rate or variable rate
  • Repaid over a short or longer period
  • For your own home / Investment home

Use a repayment calculator to get an estimate of how much you'll need to repay each month. With an estimate, you can find it easier to budget your daily expenses, and start better saving habits to help pay off your loan faster.

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With the sizeable amount that you have to repay, you’ll certainly want to find ways to reduce the interest charged over the life of the loan. Your options usually involve making sure you always have a competitive interest rate and making extra repayments to reduce the interest charged against the loan balance. Using a redraw facility or an offset account can make your extra repayments really count. These loan features can come with fees, along with other ongoing costs.

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What are the ongoing costs of a home loan?

Along with your monthly repayments, you may also incur ongoing costs attached to your home loan. Some ongoing costs include:

  • Redraw facility fees — Some lenders may charge a fee for withdrawing funds from a redraw facility.
  • Offset account fee — Many lenders charge an annual fee for an offset account.
  • Break fees — If you refinance or switch loans during a fixed-rate term, break fees can apply to you.
  • Late payment fee / default fee — This is a penalty that is incurred when you make a required payment after the due date. How this is charged will depend on the lender.

What are the hidden costs of a home loan?

When adding up all your costs, don’t forget to ask your Home Loan Specialist about the often overlooked fees or costs that may apply to you. This could make a difference when you’re managing your repayments.

Some overlooked fees may include:

  • Early exit fees — When a home loan is repaid within a certain period, this fee may be charged by the lender.
  • Discharge fees — Some lenders may charge this when the home loan is paid out in full.
  • Property valuation fees — Many lenders will require a property valuation be completed when buying a new property and refinancing.

By knowing all the different costs that apply to you, you can more easily plan and manage your repayments.

How to avoid these extra costs

A number of these fees such as loan setup fees can be avoided with the help of a Home Loan Specialist to negotiate on your behalf. Find out how to avoid these fees by chatting with an expert now.

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Important legal stuff

COMPARISON RATE WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years.
Lendi is the trading name of Lendi Pty Ltd, a related body corporate of your licensed credit assistance provider, Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence Number 442372). We will never sell your email address to any third party or send you nasty spam, promise.
EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
Lendi is a privately owned and operated Aussie business. Our mission is to provide Aussies with the right experience when choosing a home loan from our panel of major and non-bank lenders including Click Loans which is a wholly owned subsidiary of Auscred Pty Ltd and a related body corporate of Auscred Services, your credit assistance provider. Although Lendi compares over 1600 products from over 30 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 40% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. We have an independent and founder led board.
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