Understanding Mortgage Fees

Mortgage fees are additional costs for the borrower.  These include  an establishment or application fee which is a one-off fee for loan approval, and covers the home loan set-up cost. Lenders may also charge a break out fee if a borrow pull out of a fixed rate loan before the deal ends. The amount of the fee is relative to the outstanding balance. Furthermore,moving from one loan to another might incur deferred establishment fees or exit fees.

To finalize mortgage deals, legal fees or disbursements must be paid for as well. These fees are charged to determine whether the seller has the legal capacity to sell the house and to transfer the property ownership to the buyer’s Lender’s Mortgage Insurance. This fee is also required to protect the lender in the case of loan default.

The borrower may also be charged with management fees every month to cover administration and management charges and a mortgage registration fee that is paid to the Land Titles office to register the sale.

A property valuation fee is so that the registered property assessors can evaluate the property, and a transaction fee is to process and finalize the deal. And of course, every homebuyer must pay a stamp duty fee to the State Government, the rate of which is relative to the value of the property. The stamp duty amount varies from one state to another depending on the average property values in the state. You may check the stamp duty calculations from state to state at the Revenue Office website.