Variable Rate Loan Fees Start Before You Submit the Application
Most lenders charge an application fee when you apply for a variable rate home loan. This fee typically ranges from $300 to $600, though some lenders waive it. The fee covers the lender's processing costs, including credit checks, property valuation, and document verification. You pay this cost whether your application is approved or declined, so confirm the amount upfront.
In our experience, buyers who compare application fees across multiple lenders can save several hundred dollars before they even reach settlement. Some lenders advertise zero application fees but offset the cost with higher ongoing account fees or slightly higher interest rates. Consider a buyer who receives three conditional approvals: Lender A charges $600 upfront, Lender B charges zero but adds $10 per month in account fees, and Lender C charges $400 with no ongoing fees. Over a five-year period, Lender B costs $1,200 in ongoing fees alone, while Lender A costs $600 once. Lender C delivers the lowest total fee burden at $400.
When reviewing home loans, focus on the total cost over the period you expect to hold the loan, not just the initial charge.
Valuation Fees Are Separate from Settlement Costs
The lender arranges a property valuation to confirm the home's market value matches the purchase price. Valuation fees are typically between $200 and $400 depending on property location and type. This fee is separate from the building inspection or pest report you organise yourself. The lender uses the valuation to assess loan-to-value ratio and determine whether Lenders Mortgage Insurance applies.
In some cases, lenders absorb the valuation cost if you meet specific criteria, such as applying through a broker or borrowing above a threshold amount. Buyers in regional Victoria may face slightly higher valuation fees due to the additional travel required for the valuer.
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Lenders Mortgage Insurance Applies When Your Deposit Is Below 20%
Lenders Mortgage Insurance is a one-off premium charged when your deposit is less than 20% of the property's value. LMI protects the lender if you default on the loan. The premium is calculated based on your loan-to-value ratio and the loan amount. A buyer borrowing 95% of the property value pays a higher premium than a buyer borrowing 90%.
LMI can add thousands of dollars to your upfront costs. You can pay the premium at settlement or capitalise it into the loan, though capitalising increases your loan balance and the total interest paid over time. Under the Australian Government 5% Deposit Scheme, eligible buyers avoid LMI entirely when borrowing with a 5% deposit, which can reduce upfront costs by $10,000 to $30,000 depending on the property price.
Some lenders offer LMI waivers for specific professions, including medical, dental, legal, and accounting roles, provided you meet their criteria. These waivers typically apply to loans up to 90% of the property value.
Ongoing Account Fees Range from Zero to $400 Per Year
Variable rate loans may include monthly or annual account fees. Monthly fees typically range from zero to $15, which translates to up to $180 per year. Some lenders charge a flat annual fee instead, usually between $200 and $400. These fees cover account maintenance, including access to online banking, transaction processing, and customer support.
If your variable rate loan includes an offset account, the lender may charge an additional offset account fee of $10 to $20 per month. Offset accounts reduce the interest charged on your loan by offsetting your savings balance against your loan balance. The fee is worth paying if your offset balance consistently exceeds $10,000, as the interest saved typically outweighs the cost.
Loans without offset accounts often have lower or zero ongoing fees. Buyers who prefer simplicity and don't plan to maintain a savings buffer may find these products more cost-effective.
Settlement Fees and Legal Costs Add $1,500 to $3,000
Settlement costs include legal fees, title transfer fees, and government charges. Legal fees for conveyancing in Victoria typically range from $1,200 to $2,500 depending on the complexity of the transaction. Title transfer fees are set by the state government and vary based on the property value. Mortgage registration fees are approximately $120.
If you're eligible for first home buyer stamp duty concessions in Victoria, you may receive a full exemption on properties valued up to $600,000 or a partial concession on properties between $600,001 and $750,000. This concession can save up to $30,000 in stamp duty, but it doesn't eliminate legal and registration costs.
Buyers should also budget for building and pest inspections, which cost between $400 and $800 combined, and home insurance, which is required from settlement day.
Discharge Fees Apply When You Exit the Loan
Discharge fees are charged when you pay out your loan, whether you're selling the property, refinancing, or paying off the balance in full. Discharge fees typically range from $300 to $500. Some lenders charge an additional fee for preparing discharge documents or registering the discharge with the land titles office.
If you refinance within the first few years of taking out your variable rate loan, discharge fees add to the cost of switching lenders. Buyers who expect to refinance after a fixed rate period ends should account for this cost when comparing loan products.
Some lenders waive discharge fees if you've held the loan for a minimum period, typically five years. Check the loan terms before signing to confirm whether a waiver applies.
Rate Discounts Depend on the Loan Amount and Deposit Size
Lenders offer different variable interest rates depending on your loan-to-value ratio and the amount borrowed. Buyers with a 20% deposit or more typically receive a lower rate than buyers borrowing 90% or 95% of the property value. The rate difference can be 0.10% to 0.30%, which translates to thousands of dollars in interest over the life of the loan.
Some lenders also offer rate discounts for loans above a specific threshold, such as $250,000 or $500,000. If you're borrowing close to the threshold, it may be worth adjusting your deposit slightly to access the lower rate.
Rate discounts are also available for borrowers who link additional products, such as credit cards or transaction accounts, to their home loan. However, the discount is typically small, often 0.05% to 0.10%, and may not justify holding products you don't need.
Package Fees Bundle Features but Add Annual Costs
Some lenders offer packaged home loans that bundle multiple features, including offset accounts, unlimited redraws, and fee waivers, in exchange for an annual package fee of $300 to $400. The package may also include discounts on credit cards, personal loans, and insurance products.
Packages deliver value if you use the included features regularly. A buyer who maintains an offset account, makes frequent extra repayments, and holds a lender-linked credit card may save more in waived fees and discounts than the cost of the package. A buyer who only uses the core loan features without an offset or additional products will pay the package fee for little benefit.
Compare the total cost of the package against the cost of a standard variable rate loan with the specific features you need added individually.
Extra Repayment Limits and Redraw Fees Vary by Lender
Most variable rate loans allow unlimited extra repayments without penalty. However, some lenders cap the amount you can redraw from your loan or charge a fee each time you access funds. Redraw fees typically range from $20 to $50 per transaction. If you plan to make extra repayments and access those funds later, confirm the redraw terms before committing to a lender.
Loans with offset accounts generally don't have redraw restrictions, as your savings sit in a separate account rather than being paid into the loan itself. Offset accounts provide more flexibility for buyers who want access to their funds without triggering redraw fees.
Some lenders impose minimum redraw amounts, such as $500 or $1,000, which can limit your ability to access smaller amounts when needed.
Call one of our team or book an appointment at a time that works for you. Gfinance Group works with first home buyers across Victoria to compare variable rate loan features, calculate total costs, and structure applications that align with your deposit and budget.
Frequently Asked Questions
What fees do I pay when applying for a variable rate home loan?
Most lenders charge an application fee between $300 and $600, plus a valuation fee of $200 to $400. Some lenders waive the application fee but may offset the cost with higher ongoing account fees.
Do I have to pay Lenders Mortgage Insurance if my deposit is less than 20%?
LMI is typically required when your deposit is below 20% of the property value. The premium is a one-off cost and can range from several thousand to tens of thousands of dollars depending on your loan amount and deposit size. Under the Australian Government 5% Deposit Scheme, eligible first home buyers avoid LMI entirely.
What ongoing fees apply to variable rate home loans?
Variable rate loans may include monthly account fees of up to $15, annual package fees of $300 to $400, and offset account fees of $10 to $20 per month. Some lenders offer zero ongoing fees on basic variable products.
What are discharge fees and when do I pay them?
Discharge fees are charged when you pay out your loan, whether through selling, refinancing, or paying off the balance. These fees typically range from $300 to $500 and may include additional charges for document preparation.
Do lenders charge fees for making extra repayments or redrawing funds?
Most variable rate loans allow unlimited extra repayments without penalty. However, some lenders charge redraw fees of $20 to $50 per transaction or impose minimum redraw amounts. Offset accounts typically provide fee-free access to your savings.
