'Home loan exit fees are on the rise'

Tuesday 02 March 2010

Article by Mozo

Homeowners who try to refinance their mortgage risk incurring a rising number of exit fees, a commentator has said.

Anthony Keane, a finance writer for News Limited, noted that the fees have been brought in by the major lenders to discourage customers from switching loans.

He quoted research by Smartline Personal Mortgage Advisers, which found that exit charges can range from a flat fee of $750 to $1,000 or a percentage of the loan balance.

This could be as much as 2.5 per cent, which could cost more than $6000 for a typical mortgage of about $300,000, the body said.

"These fees are separate to fixed loan break fees payable when borrowers try to switch to a variable rate home loan. Those break costs can run into tens of thousands of dollars, depending on fixed loan terms and interest rates," said Mr Keane.

His findings may be of interest to people who plan to compare home loans with a view to switching in the future.

Last week, Mortgage Choice revealed that a growing number of Australians are choosing to share the costs of home ownership by buying property with their friends and family.

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