Applying for a home loan brings a set of upfront costs that sit apart from the interest rate. Two of the most common are an application fee and a valuation fee. Neither is universal: some lenders charge both, some charge one, some charge neither, and some will waive a fee for a particular loan or campaign. That variation is exactly why the useful moment to ask is before you apply, not after you receive an approval.
This guide sets out what these fees are generally for, which related costs tend to appear alongside them, and the questions worth putting to your lender or broker so you can compare offers on total cost rather than on the headline rate alone.
What an application fee is for
An application fee — sometimes called an establishment fee or loan setup fee — is a charge for assessing and processing your application. It covers the administrative work involved in taking your application, verifying information and preparing loan documents.
Because it is a processing charge, the practical questions are less about the label and more about the conditions attached to it:
- Is it charged at all on the loan I am applying for, and is the amount fixed or does it scale with the loan size?
- Is it paid upfront, or added to the loan balance and repaid over time?
- Is it refundable if the application is declined or if I withdraw before settlement?
- Does it cover the full process through to settlement, or are there separate charges later?
That last point matters. A mortgage broker's role, as described by Moneysmart, includes helping you apply for the loan and managing the process through to settlement — so when a professional fee is being charged, ask what stages of that process it actually covers.
What a valuation fee covers
Before a lender approves a loan secured against property, it needs to be satisfied about the property's value. That usually means ordering a valuation, and the cost is often passed on to the applicant.
Valuations are not all the same. Depending on the lender and the property, the assessment may be a desktop or automated assessment based on data, or a physical inspection. Ask which type will be used, because it affects both the fee and how long the step takes.
Questions to put to the lender:
- Will a valuation be ordered, and who pays for it?
- Is it a full inspection or a desktop/automated assessment?
- How much is the fee, and when is it charged — at application or later?
- Will I receive a copy of the valuation?
- If the valuation comes in below the purchase price, does the fee still apply, and is a second valuation charged?
The last question is easy to overlook and can be expensive. A low valuation can change the loan-to-value ratio, which may change the loan's pricing or trigger further costs.
Related costs to ask about in the same conversation
Application and valuation fees are rarely the only upfront amounts. When you compare loans, ask for an itemised list that covers:
- Settlement or documentation fees — charged for preparing and completing settlement.
- Government charges — such as registering the mortgage or transfer duty, which vary by state and territory.
- Lenders mortgage insurance or a similar risk fee — where it applies, ask who pays and whether it is a one-off premium.
- Ongoing fees — annual or monthly account-keeping fees that continue after settlement.
- Discharge fees — charged when the loan ends or is refinanced, which is why Moneysmart suggests calculating the cost of switching your mortgage to decide whether you could save money.
If you are using a broker who proposes to charge you a fee directly, Moneysmart's guidance is to ask around or look online to see whether other brokers charge fees for similar services, and how much those fees are. That is a reasonable benchmark exercise, and it is worth doing before you commit rather than after.
Pre-application checklist
Take this list into your first substantive conversation with each lender or broker you are considering:
- Which upfront fees apply to this specific loan, itemised by name and amount?
- When is each fee payable — at application, at settlement, or added to the loan?
- Which fees are refundable or waivable, and on what conditions?
- What happens to each fee if the application is declined or I withdraw?
- Will a valuation be ordered, what type, and who pays?
- Do any government charges apply, and are they included in the estimate I've been given?
- If a broker is involved, do they charge me directly, how much, and is it refundable?
- Does the fee change if the loan amount, property type or state changes?
- What ongoing fees apply after settlement?
- Can I have all of this in writing before I submit an application?
Why the upfront figure is only part of the comparison
Moneysmart notes that a home loan is a long-term debt, so even a small difference in the overall cost of the loan adds up over time, and that small differences in your mortgage interest rate can make a big difference to the long-term cost of your home loan.
The practical implication: a loan with low or no upfront fees is not automatically cheaper, and a loan with higher upfront fees is not automatically worse. Weigh the upfront amount against the ongoing cost.
When lenders publish a comparison rate alongside the headline rate, ask which fees that figure includes and which it leaves out — treatment can differ between products, and reading the two side by side is one of the costs and considerations Moneysmart flags when comparing home loans.
Getting confirmation in writing
Verbal answers are not enough to rely on. Before you apply, ask for an itemised fee estimate by email, and read it for clauses that allow a figure to change — "fees may vary", "as assessed", or amounts described as estimates rather than fixed. Ask for any conditional item to be stated as a firm amount, or explained as a range with the reason for the range.
Also confirm the mechanics: whether fees are deducted from loan proceeds or paid from your own funds, and whether paying a fee earlier accelerates any step of the assessment. Then keep the estimate with your records, and re-check it against the final loan documents before settlement.
What you should verify yourself
- Whether the fee schedule you have been given is current, and whether a waiver or promotion applies to your application.
- Whether any state or territory charge applies to your transaction and who is responsible for paying it.
- Whether the broker's fee arrangement and the lender's fee arrangement are being quoted separately, so you can see what each covers.
- Whether the fees quoted apply to the loan you actually end up with, if the product or loan size changes during assessment.
Next steps
Shortlist two or three loans, then work through the ten-point checklist with each lender or broker and collect a written, itemised fee estimate. Put the upfront fees and the ongoing rate side by side and compare the total, not just one column. If a fee is unexplained, refundable only in narrow circumstances, or described only as an estimate, ask again before signing.
If you want to see how different home loan options line up on fees and rates, you can start with our home loan guides at /money/home-loans/, or use /match/ to compare options based on your own situation.
General information only
This article is general information about how home loan application and valuation fees work and what to ask about them. It is not personalised legal, tax, credit or financial advice, and it does not take account of your objectives, financial situation or needs. Fees, charges and eligibility differ between lenders, loan products, properties and states, and they change over time — always confirm current amounts directly with the lender, and check the loan contract before you sign. Consider speaking to a licensed mortgage broker or financial adviser before making a decision. Nothing here is a recommendation of a particular provider or product, and no outcome, approval or saving is promised.