When you’re gearing up to buy a property or refinance an existing loan, it’s easy to focus on the big numbers — like your interest rate and loan amount. But the smaller, often-overlooked details matter too. One of the biggest hidden costs? Mortgage fees.

Mortgage fees can add thousands to the cost of buying a home, and if you’re not paying attention, they can catch you off guard. The good news? Once you understand what they are and how they work, you can budget smarter and even negotiate better terms.

In this guide, I’ll walk you through the most common types of mortgage fees in Australia, why they exist, and how to manage or even avoid them when possible.

Categories of Mortgage Fees You Need to Know

Mortgage fees typically fall into three main categories:

Upfront Fees (one-off costs when you set up the loan)
Ongoing Fees (charged monthly or annually)
Discharge Fees (when you close or pay out the loan)

Let’s dive into each category so you know exactly what to expect.

Upfront Mortgage Fees

Application or Establishment Fee

What it is:
This fee covers the admin costs of processing your mortgage application — assessing your paperwork, preparing loan documents, and setting everything up.

Example:
An application fee might be around $600.

Expert Tip:

Negotiate: Especially if you have a strong credit history, some lenders may waive or discount this fee.

Valuation Fee

What it is:
Before approving your loan, the lender wants to confirm that the property is worth what you’re paying. A licensed valuer assesses the property’s market value.

Example:
Valuation fees usually range from $200 to $600, depending on the property type and location.

Expert Tip:

Shop Around: Some lenders offer free valuations as part of promotions — a simple way to save a few hundred dollars.

Legal Fees

What it is:
Lenders incur legal costs preparing and checking mortgage documents. Some of these costs are passed onto you.

Example:
Expect to pay anywhere between $300 and $1,000 for legal fees.

Expert Tip:

Ask for a Quote: Always request an itemized breakdown upfront so you’re not blindsided later.

Lenders Mortgage Insurance (LMI)

What it is:
If your deposit is less than 20%, most lenders will require you to pay LMI to protect them if you default. (Important: It protects the lender, not you.)

Example:
On a $400,000 property with a 10% deposit, LMI could cost around $8,000 to $12,000.

Expert Tip:

Save More: Aiming for a 20% deposit can save you thousands by avoiding LMI altogether.

Government Fees

What it is:
You’ll also have to pay state or territory government fees like stamp duty, registration fees, and transfer fees.

Example:
Stamp duty on a $500,000 property in NSW is approximately $17,990.

Expert Tip:

Use Online Calculators: Check your local government’s stamp duty calculators to budget accurately.

Ongoing Mortgage Fees

Monthly Service Fees

What it is:
Also known as loan service or administration fees, these are regular charges for managing your mortgage.

Example:
Fees might range from $10 to $30 per month.

Expert Tip:

Consider Fee-Free Loans: Some basic or no-frills loans waive these fees altogether.

Annual Package Fees

What it is:
If you sign up for a packaged home loan with extra features (offset accounts, credit cards, rate discounts), you’ll likely pay an annual fee.

Example:
Typical annual package fees are around $300 to $400.

Expert Tip:

Weigh Up the Value: Only pay for a package if you’re using the extra features enough to justify the cost.

Redraw Facility Fees

What it is:
A redraw facility lets you access extra repayments you’ve made on your mortgage — but some lenders charge each time you use it.

Example:
Redraw fees might be $25 per transaction, or a flat yearly fee.

Expert Tip:

Know the Rules: Some redraw facilities have minimum redraw amounts or limited free transactions per year.

Offset Account Fees

What it is:
Offset accounts reduce the interest you pay on your mortgage — but maintaining one might attract a monthly or annual fee.

Example:
Offset fees could be $10 per month or be bundled into an annual package fee.

Expert Tip:

Crunch the Numbers: Offset accounts can save you thousands in interest — even if there’s a small fee.

Discharge and Exit Fees

Early Repayment Fees

What it is:
If you pay off a fixed-rate loan early, you might be charged an early repayment fee.

Example:
Costs vary widely and depend on how much time is left on your fixed term.

Expert Tip:

Check First: Always review your loan contract for early repayment conditions before making lump sum payments.

Break Costs

What it is:
Break costs arise if you refinance, sell, or switch loans during a fixed term. They reflect the lender’s financial loss.

Example:
Break costs can run into thousands of dollars — even tens of thousands for large loans.

Expert Tip:

Request an Estimate: Lenders must provide a break cost estimate if you ask.

Discharge Fees

What it is:
When you fully repay your loan (or refinance with another lender), you’ll pay a discharge or exit fee for final paperwork.

Example:
Fees range from $150 to $350.

Expert Tip:

Budget for It: Factor this into your moving or refinancing costs to avoid last-minute surprises.

Practical Tips for Managing Mortgage Fees Like a Pro

Shop Around

Not all mortgages are created equal — and fees can vary wildly.

Tips:

Use online comparison sites to assess fees alongside interest rates.
Work with an independent mortgage broker who can access multiple lenders.

Negotiate Where Possible

It never hurts to ask for a fee reduction or waiver.

Tips:

Mention competing offers.
Highlight your strong financial profile (good credit, stable income).

Factor Fees Into Your Total Cost

Don’t just look at interest rates — calculate the real cost of a loan over time.

Tips:

Use a mortgage calculator that includes fees in its estimate.
Consider the total cost over 5, 10, and 30 years.

Understand All Terms and Conditions

Mortgage contracts can be long and complex, but skipping the fine print can cost you.

Tips:

Read every fee disclosure document.
Ask for clarification in writing if any fees seem vague.

Take Advantage of Fee-Free Features

Some promotions can genuinely save you money.

Tips:

Look out for no-application-fee offers.
Target lenders offering free redraw or offset accounts.

Final Thoughts

Understanding mortgage fees isn’t just a box-ticking exercise — it’s about protecting your future wealth. The fewer hidden costs you fall prey to, the more money stays in your pocket for building equity, investing, or simply living your life.

By familiarizing yourself with upfront, ongoing, and discharge fees, shopping around, negotiating smartly, and always reading the fine print, you’ll set yourself up for mortgage success.

Mortgages aren’t just about the rate — they’re about the total package. And when you know how fees work, you’re in a far better position to make confident, informed choices on your journey to homeownership.