Understanding "Bank Speak" - Home loan fees jargon explained

June 10, 2014
Annette Kennedy

Mortgage Broker, John Kennedy of Mortgage Choice in Mudgeeraba, Gold Coast clears the confusion surrounding some common home loan fees.

For many home buyers, loan fees can be especially hard to decipher.

Trying to compare different loan products can be like learning a new language but it’s important to consider all the fees that may apply over the life of your loan. Just to add to the confusion, different lenders often use different words to describe the same fees.

With this in mind, let’s clear the confusion.


Upfront fees

The initial one-off payment can be known as establishment fees, application fees, upfront fees, legal fees, start-up fees or set up fees.*


Ongoing fees

You may also come across these described as service, account-keeping or administration fees. These can be monthly or annual costs to you.*

There are also other fees like redraw fees on certain products.


Exit fees – they can still apply

If your loan commenced prior to 1 July 2011 you may still be liable for an exit fee if you change loans, though some lenders have removed these fees.


If your loan commenced after the 1 July 2011, lenders cannot, by law, charge an exit fee.*  There is however an administration fee charged by most lenders to prepare for the closure of your loan. This fee varies from lender to lender but is on average $300.


Bank Loan Packages

Home loans tend to fall into two main categories - Basic or Professional Packages.


Basic Package Loans

These loans tend to be for amounts of less than $250,000 or if you don’t want any special features on your loan.


There is usually an upfront fee on a basic loan - typically around $600.


If you choose a basic loan with fixed interest an ongoing monthly fee is charged – around $8 per month. If you take out a basic variable rate loan, then no ongoing fees are charged just the upfront fee.


Professional Package Loans

Professional packages provide an ongoing discount on the loan interest rate. The more you borrow, the bigger the discount.


Professional package home loans are available to anyone, and they represent real value if your loan is over $250,000. If you select a professional package you will usually pay no upfront fee but pay an ongoing annual package fee – typically around $395/year.


Let us do a cost comparison


Fees on home loans do change so to get the latest information make an appointment to speak to  your local mortgage broker of Mudgeeraba, Robina, Merrimac and surrounding Gold Coast suburbs, John Kennedy of Mortgage Choice in Mudgeeraba. He will guide you through the language of ‘Bank Speak’ and provide you with a cost comparison so you can compare apples with apples.


Save yourself time and call John today on 5559 2563 or email john.kennedy@mortgagechoice.com.au.



Posted in: Home loans

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