What lending fees should a first home buyer expect?
The price of a home loan is not just the interest rate. Sitting alongside it is a set of lending fees the lender charges to assess, establish and run the loan — and how many of them apply, and how large they are, varies from one lender to the next. The rate gets the attention; the fees are where the real cost often hides. For a first home buyer, knowing what each fee is for makes it far easier to compare two loans honestly rather than being drawn to the headline number alone.
The fees you are most likely to meet on a home loan include:
- Application or set-up fees. A once-off charge for assessing and establishing the loan. Some lenders waive it, some bundle it into a package fee, and some charge it outright — so the same loan amount can carry very different upfront costs depending on whose policy you are inside.
- Property valuation. Lenders generally want an independent valuation of the property they are lending against. Sometimes the lender absorbs it; sometimes it is passed on to you.
- Ongoing account or service fees. Depending on the loan type, there may be a monthly account-keeping fee or an annual package fee that, in return, may discount the rate and waive other charges. Whether a package works in your favour depends on the size of the loan and the features you will actually use.
- Settlement and legal disbursements. Smaller charges that cover the mechanics of settling the loan and registering the mortgage.
The risk fee, and why your deposit size matters
There is one fee that catches first home buyers off guard more than any other: the risk fee, also charged by some lenders as lenders mortgage insurance. It is a once-off cost that applies when you borrow more than a lender's acceptable loan-to-value ratio — for most home loans, that threshold is 80% of the property's value, or an 80% LVR.
Borrow above 80% and the lender is carrying more risk, and this fee is how they price it. It is not a penalty and it is not wasted money — for many first home buyers it is the trade that lets them buy years earlier than a 20% deposit would allow. But the amount is not fixed across the market. The same deposit and the same property can produce a materially different risk fee from one lender to another, because each sets its own scale. That makes it a policy question worth comparing, not a number to simply accept.
Reading fees in the context of the whole loan
A loan with low fees and a higher rate can cost more over time than one with modest fees and a sharper rate — and the reverse is just as often true. The right way to read lending fees is never in isolation but against the rate, the features and how long you realistically expect to hold the loan. A package fee that buys a rate discount can pay for itself on a large loan and be dead weight on a small one.
For a first home buyer, the most useful step is to map the full cost of two or three genuinely comparable loans — upfront fees, ongoing fees, the risk fee if your deposit sits under 20%, and the rate — so the comparison reflects what you will actually pay rather than what the advertising leads with.
If you want the fees on your shortlist laid out plainly so you can see which loan genuinely costs less, that is worth doing properly before you commit. Book a strategy session and we will work through the numbers together.
General information only — not personal financial product or credit advice. Lending is subject to each lender's policy, your full circumstances and responsible-lending assessment. AeFin is an Australian Credit Representative (CR 464548) of Finsure (ACL 384704).