Why Are Application Fees so Expensive?
When applying for a mortgage, there are various fees involved with the mortgage application process that covers administrative work that goes into reviewing, checking, and processing each application that a wide variety of home loan providers require their applicants to fund whether they are new or existing clients.
Home loan application fees generally cost the borrower around $600.00 to $995.00. In Australia, all lending establishments charge fees, although the fees being charged may vary from lender to lender. Home loan providers charge their borrowers fees to cover administrative costs associated with a comprehensive & compliant assessment as follows:
- Conducting affordability assessments to ensure the borrower can repay the loan
- Verifying the borrower’s income and expenses
- Checking the borrower’s credit history and credit score
- Assessing the borrower’s overall creditworthiness
- Ensuring the loan is not a high-risk loan and meets the lender’s lending criteria and appetite for risk
- Providing the borrower with all relevant information about the loan, including the interest rate and fees
- Complying with responsible lending laws and guidelines
- Fulfilling the reporting and compliance requirements set by APRA and ASIC.
Overall, the main focus is on the borrowers ability to repay the loan and the lender’s risk appetite.
You can avoid paying for various mortgage fees through various ways, including the following examples:
- Applying for a no-fee mortgage
- First-home buyers can check their eligibility for the First Home Owners Grant
Potential borrowers who are concerned with the various fees and expenses involved with the mortgage application process can apply for a no-fee home loan or inquire with their home loan provider about rolling the application fees and expenses into their mortgage. A no-fee home loan is a type of home loan agreement where the one-time and ongoing fees have been waived. This home loan option can save borrowers thousands of dollars over the life of their home loan.
The FHOG can allow first-time borrowers to receive financial assistance with the mortgage application and approval processes if they are eligible. Money received from this grant can be put towards the required mortgage fees allowing borrowers to avoid paying for them out of pocket.