Fees Banks Charge on Home Loans (And How to Avoid Them)

Because Interest Alone Isn't Enough

Banks make billions in interest every year. But they also layer on fees wherever they can. Here are the most common ones you'll encounter.

Application Fee

Charged upfront when you take out the loan. Can range from $150 to over $1,000 depending on the bank and loan product.

Monthly Fee

A recurring fee — often around $10 per month — just for having the account. In an age of fully automated banking, it's hard to justify what this actually pays for.

Annual or Package Fee

Typically $150–$400 per year. This usually gives you access to the full suite of banking products including offset accounts, discounted rates, and waived credit card fees. Worth it for many borrowers — but make sure the savings outweigh the cost.

Redraw Fee

Possibly the most frustrating fee of all. You've paid extra off your home loan, and now you need some of that money back? The bank charges you to access your own money. Not all lenders do this, but it's worth checking before you commit.

How to Check for Hidden Fees

One quick method: compare the advertised interest rate against the comparison rate. If there's a large gap between them, the loan likely has high fees. If they're similar, it doesn't have many fees.

The comparison rate isn't perfect (it's based on a $150,000 loan), but it's useful for this specific purpose — flagging fee-heavy products.

The Bottom Line

Always calculate the total cost of the loan over the period you expect to have it, including all fees. A loan with a slightly higher rate but no fees can end up cheaper than a low-rate loan with fees stacked on top.