Home loan application fees increase among small lenders

With the introduction of the ban on exit fees by home loans providers set to come into force tomorrow (July 1st 2011), a number of smaller lenders have announced increases to application fees.

ME Bank will require a $150 legal fee and the same amount for a valuation, while the Greater Building Society will now charge $500 per application.

The exit fee ban was introduced in the hope that it would increase competition and make it easier to customers to switch to firms offering better rates.

However, it was met with concern by some, including chief executive of the Mortgage & Finance Association of Australia Phil Naylor, who told the Australian that non-bank lenders may be adversely affected and find it harder to compete with the big banks.

Despite the addition of application fees by some smaller lenders, Mozo recommends going online to compare home loans as it is the interest rates offered that determine the true cost.

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