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4 mortgage charges to be aware of

Whenever you carry out a home loan rates comparison, you’ll need to take all sorts of different factors into
consideration. From the interest you’ll be expecting to pay, to the term of the mortgage. These are all features that can have an impact on your final decision.
There are also certain charges you will need to bear in mind. These could add a significant amount onto your
mortgage repayments, which is why it pays to have all the information to hand before making a financial commitment.
Here are just four of the fees you’ll need to be aware of.

Fulfillment
Lender’s Mortgage Insurance
Lender’s Mortgage Insurance, or LMI as it’s often known, is a form of insurance that your lender will take out to cover itself in case you default on your loan. The Australian Securities and Investments Commission (ASIC) recommends that you save at least 20 per cent of your property’s value as a deposit to avoid paying LMI.
The Insurance Council of Australia revealed that as many as a fifth of mortgages are insured through a LMI provider,
so it’s a relatively common cost for you to be aware of.
Establishment/application fees
You might also be charged an establishment or application fee by your lender, which is designed to cover the cost of
setting up your home loan. Some companies will waive this charge, while others will expect you to pay it when you
make your application.
Exit fees
There might come a time when you decide to move on from your current lender, and see what else is available. In this case, your current lender may charge you an exit fee if your current deal hasn’t yet come to an end.
However, this is only the case if you took out your original mortgage before July 1, 2011. ASIC advises that lenders
are no longer allowed to charge exit fees on new products.
Early repayment charge
If you’re in the position to repay your mortgage before the term officially ends, it’s possible that you will be penalised
by your lender. This may be charged as a set amount or a proportion of your remaining balance.
You need to be sure of the terms and conditions of your mortgage before you sign on the dotted line, as expenses
such as this could prove to be unexpected. Discuss your requirements with us before deciding which product makes
the right financial sense for you.

Written by

Stephen Bonfield, the Managing Director, previously worked for one of Australia’s major home loan companies as an independent mortgage broker. Steve used this experience to set up his own mortgage broking company - a company that places customer needs at the forefront.

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