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The rate gets the attention, but on a short loan the fees can matter as much. On a three-month caveat loan, a 2.5% establishment fee is a bigger number than a full month of interest. Knowing each fee, and when it is charged, is how two offers get compared honestly.
Fees at the start
- Establishment fee. The lender’s fee for writing the loan, indicatively around 2.5% for a caveat loan. Deducted from the advance, so the cash received is the loan amount less this fee and any prepaid interest.
- Legal fees. The lender’s solicitor prepares the agreement, the caveat and the guarantees. The borrower pays. Usually a fixed figure in the low thousands.
- Registry fees. Lodging the caveat, and later withdrawing it. Set by each state and adjusted each July.
- Valuation fee. Only where a valuation is ordered. From a few hundred dollars for a kerbside residential assessment to several thousand for commercial or rural property. See does a caveat loan need a valuation.
- Broker fee. If the loan came through a broker, their fee is either paid by the borrower or built into the lender’s fee. Ask which.
- Your own legal advice. Guarantors are usually required to obtain independent legal advice.
Fees that only apply if things go wrong
- Extension fee. Charged if the term is extended by agreement.
- Default interest and default fees. Charged if the loan runs past its term without an extension. See default interest rates.
- Enforcement costs. The lender’s legal costs of recovery are added to the debt.
Working out the real cost
Ask for one figure: the total payable if the loan runs its full term and is repaid on time. It should equal interest for the term, plus the establishment fee, plus legals, registry and valuation. Then ask for the net amount you will actually receive at settlement. Those two numbers, not the monthly rate, are the basis for comparing offers. See how to compare private loan offers.
The plain-dealing test
A lender who will not put every fee in writing in dollars before documents are signed is a lender to walk away from. On the rates and fees page the principle is stated simply: if it is not written down, you do not pay it.
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Get matched with a funderFAQ
What is a typical establishment fee on a caveat loan?
Indicatively around 2.5% of the loan amount, usually deducted from the advance at settlement. It varies with loan size and complexity.
Are there upfront fees before approval?
A valuation fee is commonly paid upfront because the valuer has to be paid regardless. Be cautious of any other significant upfront fee before a written offer - see our page on upfront fee traps.
Is there a fee for repaying early?
Usually no exit penalty, but many agreements charge interest for a minimum term, so repaying in week two of a three-month loan may not reduce the interest already prepaid.