The easiest way to understand fixed rate loan fees

Fixed rate loans charge upfront and ongoing fees that variable rate products typically don't. Understanding these costs before you apply means you can budget properly and compare lenders on a like-for-like basis.

What fees come with a fixed rate home loan

Most lenders charge an application fee on fixed rate products, ranging from around $300 to $600. Some also charge a lock-in fee, which secures the rate between approval and settlement, usually between $200 and $750 depending on the lender. A few lenders bundle these into a single fixed rate establishment fee. You'll see these costs itemised in the loan estimate your broker provides after submitting your application.

Bentleigh East buyers often choose fixed rates for the certainty they provide during the first few years of ownership, particularly given the proximity to schools like Bentleigh Secondary College and the stability that comes with buying in an established suburb. The trade-off is less flexibility and a slightly higher fee structure compared to variable products.

Lenders Mortgage Insurance on low deposit fixed rate loans

Lenders Mortgage Insurance applies when you borrow more than 80% of the property value, regardless of whether you choose a fixed or variable rate. The amount depends on your deposit size and loan amount, but it's capitalised into the loan and paid as a one-off cost at settlement.

Consider a buyer purchasing in Bentleigh East using a 5% deposit under the First Home Guarantee. The LMI is waived entirely under the scheme, meaning the buyer avoids a cost that would otherwise run into several thousand dollars. Without the guarantee, a 5% deposit loan would typically incur LMI of around 3% to 4% of the loan amount. That's a substantial upfront saving, and it applies equally to fixed and variable rate products.

The First Home Guarantee was expanded in late 2025 and now has no income caps or place limits, making it significantly more accessible for buyers across Melbourne's south-east. If you're eligible, you can lock in a fixed rate loan without the added burden of LMI, provided you meet the scheme's criteria and purchase an eligible property.

Break costs and how they're calculated

Break costs apply if you pay off a fixed rate loan early, whether through refinancing, selling the property, or making a lump sum repayment beyond the allowed amount. The calculation compares the fixed rate you're paying to the rate the lender can now earn by reinvesting your funds. If rates have dropped since you fixed, the break cost can be significant.

A buyer who fixed at 5.5% for three years and wants to exit after 18 months when rates have fallen to 4.8% will face a break cost because the lender loses the difference over the remaining term. The cost is calculated using the outstanding balance, the remaining fixed period, and the interest rate differential. Some lenders allow up to $10,000 or $20,000 in extra repayments each year without penalty, which provides some room to pay down the loan without triggering break costs.

Are offset accounts available with fixed rate loans

Most fixed rate loans don't include an offset account. A few lenders offer a partial offset, usually capped at 40% to 60% of the loan balance, but the interest rate is often higher to compensate. Variable rate loans typically include a full offset as standard, which is one reason many first home buyers choose a split loan structure.

In our experience, buyers in suburbs like Bentleigh East who want the security of a fixed rate but also expect to accumulate savings over the first few years often split the loan 50/50 or 60/40 between fixed and variable. The variable portion includes an offset account, allowing them to reduce interest on that part of the loan while still enjoying fixed rate certainty on the remainder.

Upfront costs you'll need in addition to the deposit

Settlement costs sit separately from the deposit and include items like conveyancing, building and pest inspections, valuation fees, and government charges. These typically add up to several thousand dollars and need to be paid from genuine savings, not gifted funds or the deposit itself.

Under most lender policies, genuine savings need to cover at least 5% of the purchase price if you're borrowing above 90%, and they must be held in your name for at least three months. Settlement costs are paid on top of that, so budgeting for both is essential before you start looking at properties. Some first home buyers in Bentleigh East also access funds through the First Home Super Saver Scheme, which allows you to withdraw voluntary super contributions of up to $50,000 to use towards your deposit or costs.

Valuation fees are usually between $200 and $400 and are payable regardless of loan type. Conveyancing in the area typically runs between $1,200 and $2,000 depending on the complexity of the contract. Building and pest inspections cost around $400 to $600 combined. If you're applying for stamp duty concessions in Victoria, there's no fee to lodge the application, but you'll need to factor in the conveyancer's time to prepare the paperwork.

Victorian stamp duty concessions and how they reduce upfront costs

Victoria offers a full stamp duty exemption on properties up to $600,000 for eligible first home buyers, with a tapered concession applying up to $750,000. This applies to both new and established homes, which makes Victoria one of the more generous states for first home buyers purchasing existing properties.

Bentleigh East has a mix of older brick homes and renovated properties, with median values sitting above the full exemption threshold in many parts of the suburb. A buyer purchasing at $700,000 would still receive a partial concession, reducing the duty payable from around $38,000 to roughly $18,500. That's a saving of close to $20,000, which can be redirected towards settlement costs or retained as a buffer after moving in.

You can also access the $10,000 First Home Owner Grant if you're purchasing or building a new home valued up to $750,000. Most resale properties in Bentleigh East won't qualify for the grant, but if you're buying a new townhouse or apartment in one of the smaller developments near Centre Road, it's worth confirming eligibility with your conveyancer.

Ongoing account fees and annual charges

Fixed rate loans typically charge a monthly account-keeping fee, usually between $10 and $15 per month. Some lenders waive this fee if you meet certain conditions, such as making all repayments on time or holding a linked transaction account. Variable rate loans may or may not charge a monthly fee depending on whether they include an offset or redraw facility.

If you're comparing loan options, make sure you're looking at the comparison rate, which factors in both the interest rate and the standard fees over the life of the loan. A loan with a slightly lower interest rate but higher monthly fees can end up costing more over time, particularly if you're planning to hold the loan for the full term.

Another cost to consider is the annual package fee, which applies to some lenders' premium loan products. These packages often include discounted rates, offset accounts, and fee waivers on credit cards or transaction accounts. The annual fee is usually between $300 and $400, and whether it's worthwhile depends on the rate discount and how much you'll use the other features.

Pre-approval and how it affects your timeline

Pre-approval gives you a conditional loan offer before you find a property, and it's particularly useful in areas like Bentleigh East where stock can move quickly. The pre-approval process involves submitting your income, savings, and identity documents, and the lender assesses your borrowing capacity and eligibility for any government schemes.

Pre-approval is valid for three to six months depending on the lender, and if you're locking in a fixed rate, most lenders will only hold the rate for 90 days from formal approval. That means if you get pre-approved and don't find a property within that window, you may need to reapply or accept the current rate at the time of settlement.

In our experience, buyers who secure pre-approval before attending auctions or making offers have a much clearer sense of their budget and can move quickly when the right property becomes available. The application fee for pre-approval is usually the same as the full application fee, so there's no additional cost to applying early.

Call one of our team or book an appointment at a time that works for you. We'll walk through your deposit, your eligibility for schemes like the First Home Guarantee, and the fixed and variable rate options that suit your situation. If you're buying in Bentleigh East or nearby suburbs, we can also connect you with local conveyancers and builders who understand the area and can keep your costs in check.

Frequently Asked Questions