The Hidden Costs Of Home Loans REVEALED (Australia)


Sam: What are the hidden costs when refinancing
or purchasing a new property? Hey guys, it’s Sam from Lendi. Today we are going to talk about all the hidden
costs you might not know about when getting a new home loan. Sam: Now, if you want great tips on home loans
in Australia, make sure you subscribe to our channel and hit the bell so you can get notified
when we upload new videos. Sam: In choosing the right mortgage product,
you need to be careful and look at other things rather than just the interest rate. Some lenders can offset hidden costs in low
interest rates, which can end up costing you more in the long run. At Lendi, we’ve helped thousands of people
get a new home loan and we realised that most people are only aware of the basic fees. By the end of this video you should have
a great understanding of any other fees or hidden costs when applying for a new home loan. Sam: First we’re going to talk about all the
upfront charges. Keep in mind that fees are usually capitalized
into the loan and not an upfront out of pocket expense. If you are refinancing, it’s really important
to understand your key goals, requirements, and objectives with the loan in the first
place and make sure these fees are in line with those goals. Sam: First, we have an application or establishment
fee. Generally, this is a one off fee charged by
your lender. Now, some products and lenders do not charge
this fee and some brokers are able to negotiate with lenders to avoid this fee. Lenders Mortgage Insurance or LMI may be
applicable if you are borrowing more than 80% of the property’s value. Lenders Mortgage Insurance can range anywhere
from 1% to 4% of the property’s value. Meaning, if you’re having $1 million property
purchase at a 95% loan to value ratio, Lenders Mortgage Insurance costs could exceed $40,000
to $50,000. Do you need to Pay LMI? You can find out using the link in our description
below. Sam: Now your broker may be able to find you
a product that allows you to go up to 85% of the property’s value without paying LMI. Check with your broker directly if you’ll
qualify for a product like this in the market. Sam: If you are purchasing a property, stamp
duty or transfer duty will apply. Stamp duty typically ranges between 2% and
3% of the property’s value. If you’re a first home buyer, you may be able
to avoid a part or the entire amount of those transfer and stamp duties. If you’re a first home buyer, you may also
be eligible for further grants depending on your state that you’re located in and the
type of property that you’re purchasing. Speak to your broker directly to work out
if you qualify for any of these grants. You can find a link in the description below. Sam: If you are refinancing, there is also
a small government cost that’s typically around $200 to $300 to transfer the mortgage. Some lenders also charged legal fees payable
and capitalized into the loan at settlement. These are typically between $300 and $500. Conveyancing fees typically range from $800
to $2,000 and a conveyance is going to help you prepare and understand all types of legal
documents such as the contract of sale, as well as settlement statements and other legal
documents associated with the settlement. Sam: Some lenders also charge property valuation
fees. A lot of lenders are able to do a valuation
that doesn’t actually involve someone coming out and physically valuing the property and
can all be done online. There are a lot of lenders who do not charge
property valuation fees. However, some lenders still charged this fee
and it is typically anywhere from $300 upwards to $1,500 depending on the type of property
that’s being valued. Sam: If you are purchasing a property, you
may also need to get a pest and building inspection that’s typically around $300 to $400. Don’t forget to include the other costs associated,
such as removalist and cleaning costs. If you are not an Australian citizen or permanent
resident, you may also be required to pay a foreign tax fee, which is another government
duty when purchasing a property. Sam: Now let’s talk about the ongoing costs
of home loans. Many products charge an annual fee, which
is a recurrent cost, which typically involves associating a package loan which involves
offset accounts or credit cards being attached to the facility. Sam: Some lenders also charged fees on extra
payments. These are typically associated with fixed
rate loans. Your broker should be able to offer you many
products in the market that will be able to offer features such as an offset, redraw and
additional payments allowed on fixed rate products. You need to look out for additional fees charged
on the redraw and offset accounts. Sam: Some lenders still charge fees if you
want to redraw funds from additional payments that you’ve made. This fee is typically around $50 per redraw. Offset fees are genuinely incorporated into
the annual fee. Most lenders charge a late payment fee if
you are late or start to slip into arrears on your loan. This fee is typically around $10 to $30 per
late payment. However, there are significantly more costs
involved if you start slipping into arrears and begin to default on your home loan. Sam: Now let’s talk about the other costs
to think about. If you want to complete a product switch or
variation such as changing a variable loan to a fixed loan or adding an offset account,
some lenders also charge a variation fee, which is typically around $200 to $300. There may also be a portability fee charged. Portability is where you swap a mortgage that
is attached to one property that gets attached to a different property. Early exit fees and break costs are genuinely
associated with fixed rates. Sam: Previously the federal government and
heavily regulated by ASIC banned any exit fees charged on variable home loans. Break costs on fixed rates can range anywhere
from a few hundred dollars to greater than $10,000 and this depends on the amount of
the loan, the rate that the loan was originally fixed at and the current fixed rates that
are offered in the market today. Sam: Most lenders will also charge a discharge
fee. This ranges from about $200 to $400 and covers
the entire discharge process. Sam: That’s it, the hidden costs of home loans. If you do have any specific questions on anything
we went through, feel free to comment below. Here at Lendi our online platform allows you
to easily view and compare all of the fees associated with thousands of home loan products. Jump onto lendi.com.au to get started. Sam: If you found this video useful, please
remember to give us a thumbs up and share the video. See you next time.

3 comments on “The Hidden Costs Of Home Loans REVEALED (Australia)”

  1. Lendi says:

    Thanks for watching! Were you surprised by any of these hidden home loan fees? Please let us know in the comments below 😊

  2. Inam Ahwang says:

    Very informative 🤙🏽

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