No Ongoing Fees: Too Good to Be True for a Home Loan?
The principal and interest rate make up the bulk of a home loan. Fees and taxes make up a smaller portion, but they add to the total. When lenders compete for your business, they offer no ongoing fees mortgages as an incentive. It sounds too good to be true, but there are circumstances when applicants qualify for them. The following is some information to consider.
What are Mortgage Fees?
Every home loan consists of up-front fees such as application, valuation and title. Lenders waive those fees for a number of reasons. For example, to help the applicant, they charge them as part of the closing costs. At that point, the homeowner is more financially fit.
Home loans also consist of annual and monthly fees. These are usually maintenance charges. Ongoing fees pay the administrative costs associated with processing and maintaining a loan’s current information. Technology has done a lot to streamline administrative processes and lower costs, but they still exist. There are people who double check that payments are posting correctly.
No Ongoing Fees
Since so many costs are associated with processing a loan, why would a lender waive them? Well-qualified applicants are desired by lenders because they are low-risk. So, lenders are willing to compete for their business. In other cases, loan-types qualify for a fee waiver such as the toggle offset mortgage. There is a push to help first-time homebuyers and the young generation purchase a home. Special offers and grants exist for these two groups among others that waive fees, too.
No Ongoing Fees Conclusion
If a lender offers you a no ongoing fees home loan, consider it. You should always double-check the rest of the loan’s terms, but it is an attractive offer. Our Mortgage House team can detail more information for you and check how we can help, too. Take a look at our home loan rates calculator, which is free and no strings attached.