Home loan fees and features explained
Learn how home loan fees and features affect your total borrowing cost. Understand application, ongoing and exit fees, break fees, redraw, comparison rates and flexibility.
Home loans come with fees and features that affect your total cost, flexibility, and ability to manage your loan over time. Understanding these upfront helps you avoid surprises and choose a loan that works for you.
This guide breaks down common home loan fees - from application to discharge and key features like redraw facilities and extra repayments.
What are home loan fees and features?
Home loan fees are charges you pay at different stages of your mortgage - when you apply, while you hold the loan, and when you close it. Loan features are built-in tools that affect how you manage repayments and access funds.
Both directly affect your total borrowing cost and day-to-day flexibility. Two loans with the same interest rate can be different once you factor in fees and features.
Types of home loan fees
Home loan fees generally fall into three categories:
- Upfront fees - charged when you set up the loan. These include application fees, valuation fees, and government charges like stamp duty and mortgage registration.
- Ongoing fees - charged during the loan term. Some lenders charge monthly service fees or annual package fees. These add up over a 30-year loan.
- Exit fees - charged when you close, refinance, or break a fixed-rate loan. Discharge fees typically apply.
With Unloan, there are no application fees and no ongoing fees.
What is a break fee?
A break fee is a charge you may pay if you end a fixed-rate home loan before the fixed term ends.
Lenders set fixed rates based on expected interest over the fixed period. If you exit early, the lender may adjust for the difference between your fixed rate and current market rates, which can result in a break fee.
The amount depends on factors such as changes in interest rates and how much time is left on your fixed term.
Unloan offers variable-rate home loans only, so break fees on fixed-rate loans do not apply.
What is a discharge fee?
A discharge fee is a one-off charge when you close your home loan or refinance to a different lender.
It covers the paperwork to remove the lender’s mortgage from your property title. This includes deregistering the mortgage with your state’s land titles office.
Unloan does not charge any discharge fees.
What is a cooling-off period?
A cooling-off period is a limited period after signing a property contract during which the buyer may withdraw from the purchase.
Rules vary by state and territory. In many cases, a fee may apply if you withdraw during the cooling-off period. For example, in New South Wales, the cooling-off period is generally five business days, and a fee of 0.25% of the purchase price may apply if you choose to withdraw.
Cooling-off periods generally apply to property purchase contracts, not home loan contracts. If you withdraw from a purchase during this period, any loan application or conditional approval may need to be reassessed.
What is a repayment holiday?
A repayment holiday is an arrangement with your lender to temporarily pause or reduce your home loan repayments.
Interest generally continues to accrue during this period. This means your loan balance may increase, and the total interest paid over the life of the loan may be higher.
Repayment holidays may be available in certain circumstances, such as financial hardship or other changes to your financial situation and are subject to lender approval.
If you’re experiencing financial hardship, you can contact us in any of the following ways:
Email - [email protected]
Call - 1800 979 645 between 8:30am to 5pm AEST Mon - Fri
For other services to help assist you, please see our list of external support services.
What is debt consolidation?
Debt consolidation means combining multiple debts, such as credit cards, personal loans or car loans, into one loan with a single repayment.
Some borrowers refinance their home loan to combine other debts into their home loan. This may reduce their regular repayments, but it can also increase the total interest paid overtime, especially if the debt is repaid over a longer loan term.
Before consolidating debt, it’s important to compare the interest rate, fees and total cost over the life of the loan.
What is a mortgage prisoner?
A mortgage prisoner is a borrower stuck with their current lender because they no longer meet lending criteria to refinance elsewhere.
This can happen even if you’ve never missed a repayment. Changes in your income, expenses, property value, or tighter lending standards can all affect your eligibility to switch.
Common causes include reduced income (e.g., going part-time or self-employed), rising living expenses, or a drop in your property’s value that pushes your LVR above 80%.
How do fees affect the total cost of a home loan?
Fees can add to the total cost of your home loan over time. Even small ongoing fees may increase the overall amount you pay across the life of the loan.
Worked example - how fees add up
This is an illustrative example showing how fees may add to the overall cost of a home loan over time. It uses a sample loan amount and loan term for demonstration purposes only and does not calculate total loan interest. Actual fees and costs will vary depending on the lender and loan.
This example shows the fees themselves and does not include any additional cost that may arise if fees are added to the loan balance. Some fees may be paid upfront or charged separately, while others may be included in the loan, depending on the lender and loan structure. If fees are included in the loan balance, they may also attract interest at the loan rate, which can increase the total cost over time.
This example doesn’t include other fees that may apply such as discharge fees or break fees on fixed loans. With Unloan, there are no application fees or ongoing fees.
What is a comparison rate?
A comparison rate is a single percentage that combines a loan’s interest rate with certain standard fees and charges.
Lenders are required by law to display a comparison rate alongside the advertised interest rate.
It is calculated using a standard example of a $150,000 loan over 25 years, which may not reflect your actual loan amount, term, or costs.
The comparison rate can be used as a guide to compare loans, as it shows how certain fees and charges may affect the overall cost.
If a loan’s comparison rate is higher than its advertised interest rate, this may indicate that fees and charges increase the overall cost. If the two rates are closer together, this may indicate fewer included fees, however not all fees and costs are captured in the comparison rate.
How do loan features affect flexibility?
Loan features can affect how you manage repayments and access available funds.
- Extra repayments - paying more than the minimum can reduce the balance on which interest is calculated. With Unloan, you can make unlimited extra repayments at no charge.
- Redraw facility - lets you access extra repayments you have already made, subject to your loan terms. Unloan includes a fee-free redraw facility on every loan.
- Offset account - a transaction or savings account linked to your home loan. The balance in the account reduces the balance used to calculate interest. Not all lenders offer offset accounts, and some loans with an offset account may have additional fees or a higher interest rate.
Redraw facility vs offset account
Unloan offers an unlimited fee-free redraw facility, so you can access extra funds anytime. Learn more about Unloan’s redraw facility.
Please note that Unloan does not offer an offset account.
What to compare when choosing a home loan
The interest rate matters, but it is only one part of the overall cost. Fees, features and loan terms can also affect what you pay overtime.
- Interest rate and comparison rate - the comparison rate combines the interest rate with certain standard fees and charges. It can be used as a guide when comparing loans, but it is based on a standard example and may not reflect your actual loan amount, term or costs
- Upfront fees - these may include application fees, valuation fees and settlement costs. Fees vary between lenders and loan types.
- Ongoing fees - these may include ongoing account fees or package fees, which can add to the overall cost over time. Unloan does not charge ongoing loan account fees.
- Extra repayment flexibility - check whether you can make extra repayments and whether any fees or conditions apply.
- Redraw or offset - consider whether you need access to extra repayments through redraw, or a linked transaction account through an offset feature. Fees, access rules and interest rates can vary depending on the loan.
- Loan features you are likely to use - compare the features included with the loan and whether they are relevant to your needs.
How home loan fees may be reduced
Some home loan fees vary between lenders and loan types, while others may still apply depending on your circumstances.
- Lender fees - some lenders charge application fees, ongoing account fees or package fees, while others do not. Unloan does not charge application fees or ongoing account fees.
- Fixed-rate break fees - break fees may apply if you end a fixed-rate home loan early. The amount depends on your loan and market conditions.
- Government charges - government fees and charges may still apply, depending on the transaction and your state or territory.
- First home buyer concessions - some first home buyers may be eligible for stamp duty exemptions, concessions or rebates, depending on the state or territory and the property. Please not that Unloan does not participate in any government schemes.
Estimating costs and repayments before choosing a loan
Estimating your costs and repayments before you apply can help you understand how different loan options may affect your budget.
A repayment calculator can be used to estimate repayments based on the loan amount, interest rate and loan term. Try Unloan’s repayment calculator for an estimate. A comparison rate can also be used as a guide when comparing loans, as it includes the interest rate and most standard fees and charges, but it is based on a standard example and may not reflect your actual loan amount, term or costs.
Unloan is a division of Commonwealth Bank of Australia.
Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. (For purchase loans a minimum 10% equity is required - however a Lenders Mortgage Insurance (LMI) premium and higher interest rate apply. In some cases, depending on the property’s location or type, an LMI premium may also be required for LVR between 70.01% to 80%). For loans with Lenders Mortgage Insurance (LMI) the minimum loan amount is $10,000, maximum loan amount is $3,000,000 and total borrowings per customer across all Unloan loans is limited to $3,000,000).
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. In certain circumstances you may be required to pay a Lenders Mortgage Insurance (LMI) premium. Learn more about why this is applied and how it works. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Unloan is a division of Commonwealth Bank of Australia, and Commonwealth Bank does not provide tax (financial) advice under the Tax Agent Services Act 2009 (Cth). You should consider seeking independent tax advice from a registered tax agent, accountant or adviser before you make any decisions based on this information.
Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. (For purchase loans a minimum 10% equity is required - however a Lenders Mortgage Insurance (LMI) premium and higher interest rate apply. In some cases, depending on the property’s location or type, an LMI premium may also be required for LVR between 70.01% to 80%). For loans with Lenders Mortgage Insurance (LMI) the minimum loan amount is $10,000, maximum loan amount is $3,000,000 and total borrowings per customer across all Unloan loans is limited to $3,000,000).
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. In certain circumstances you may be required to pay a Lenders Mortgage Insurance (LMI) premium. Learn more about why this is applied and how it works. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Applications are subject to credit approval, satisfactory security and minimum deposit requirements. Full terms and conditions are found on our Unloan Terms and Conditions. Modified Terms and Conditions will be set out in our Notice of Variation Agreement, if you are approved. This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. In certain circumstances you may be required to pay a Lenders Mortgage Insurance (LMI) premium. Learn more about why this is applied and how it works. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
