Home Loan Refinancing Fees - Are These Legit Fees?

Empharand on 01/01/2021 - 18:28
Last edited 01/01/2021 - 18:29

Hi everyone,

Happy new year! Lets hope for a better one this year…

Just looking for a bit of advice. I'm currently in the process of refinancing my home loan. I'm currently on a variable rate (no term) and I'm switching over to a 3 year fixed rate @ 2.35% through another bank.

I made the enquiry with the current bank in relation to exit fees, I have been told that that I will need to pay the following fees
(This is a copy and paste from their email to me)

"$295 discharge fee that gets paid to us,
Approx $300 in government fees (external fee that does not get paid to us),
Approx $300 in settlement agency fees (external fee that does not get paid to us)"

I understand that there's a 'Discharge fee' but wasn't aware of a 'Government Fee' or 'Settlement Fee' - I have gone over all of my original finance paperwork (Signed Paperwork, T&C's etc) through the current lender and there's no mention of a 'Government Fee' or 'Settlement Fee' there's however mention of their 'Exit Fee' which is $295. I did a little research on Google and all I could find is articles referencing that a Discharge Fee applies but doesn't reference the other 2 fees.

Am I being taken for a ride with those additional fees or are they legit? Those that have previously refinanced would have an idea.

Thank you in advance.

Financial Home Loan Loan

Comments

  • coxjon on 01/01/2021 - 20:40

    Government fee is legit, we were enquiring about this yesterday! It differs from state to state.

  • avoidfullprice on 01/01/2021 - 21:06
    +1

    Government fee may be refer to land title discharge from current lender and land title registration to new lander

    • miwahni on 02/01/2021 - 01:20

      That's exactly it. It's not a bank fee, so it won't appear in your documents.

  • oscargamer on 01/01/2021 - 21:58

    Before you go to fixed rate for 3 years, check out the exit fees on that !!!! Reckon you'll find they are HUGE.

    Not financial advice, but please do your calcs before getting this new locked in rate.

  • capslock on 01/01/2021 - 22:06

    I only paid a discharge fee when I recently refinanced.

    • endotherm on 02/01/2021 - 04:05

      Probably with the same bank, so they didn't need to transfer ownership details etc. as they already have them. Sounds like OP is refinancing with a different lender.

  • Sira on 01/01/2021 - 22:10

    1) All those fees are legit and the amounts seem about right. The basically charge those to dissuade you from switching and always bring it up as a way to keep you.
    2) There are plenty of cashback offers on at the moment, I know one still offering $3k, would be hoping you would be getting that to offset the costs
    3) That fixed rate of 2.35% doesn't actually seem that sharp if im honest

    Just found one for 3 years fixed 2.04% and $3k cashback and one at 1.95%

    • KaraZorEl on 04/01/2021 - 12:25

      Hi, came across this post when searching for cashback offers on Home loans. Do you mind listing them? Tx.

      • Sira on 04/01/2021 - 15:46

        https://www.canstar.com.au/home-loans/home-loan-offers/#Cash…

        Scroll about half way down the page for the current cash backs.

        The rate I was referring to was Virgin Money and $3k. You also get 1,000 virgin points per month per loan (at least I did until I refinanced away from them 1-2 months ago).

        • RichieVn on 15/01/2022 - 17:34

          does Virgin not have a 1 year fixed rate?

          • Sira on 23/01/2022 - 00:11

            @RichieVn: Strange, it appears they’ve pulled it. Best to contact them in need.

  • MadgeH on 02/01/2021 - 22:45
    +1

    Is that rate for an investment loan? If not, I'd more be concerned about the rate and not the fees.
    To answer your question though, the fees are legit

  • Kinko82 on 16/01/2021 - 19:32

    Settlement agency fee relates to your bank using an external settlement company to complete settlements so the company charges a fee which your bank make you pay for it, hence it doesn't get paid to them.
    Government fees relate to removing the current bank's mortgage and adding the new bank's mortgage on your title deed. All legit government fees.

  • GuyfromMelbourne on 23/01/2022 - 00:04

    Bank will need to get your file ready for discharge. So they are charge you their fees. Basically trying to have a last bite :)

    Bank has a mortgage registered on your property. So they pay fees to govt to take off the mortgage. New bank registers a new mortgage. And does a title search of your title. All these count into “govt fees”.

    Settlement agents. I am assuming you are walking away from smaller bank. Because they don’t have their own department and use third party legal firms for transfer of title, mortgage registration and moving monies etc. so they pay them a fees and pass it on to customer.

    This is best I could type on phone. Hope that explains.

    How do I know… I work for a bank :)

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