A variable rate home loan typically includes ongoing account fees, annual package fees, and occasional transaction charges that sit alongside your interest rate.
The rate you see advertised is only one part of what you'll actually pay. Lenders structure their fees differently, and understanding which costs apply to your situation helps you compare home loan options properly. Some variable products bundle features at no extra cost, while others charge separately for each account or facility you add.
Ongoing Account Fees and What They Cover
Most variable rate home loans charge a monthly or annual account keeping fee, usually between $8 and $15 per month. This fee covers the basic administration of your loan, including statement production, payment processing, and account maintenance. Some lenders waive this fee if you hold other products with them or if your loan amount sits above a certain threshold.
A variable interest rate loan with a $10 monthly fee adds $120 to your annual costs, which won't appear in your advertised interest rate but directly affects what you pay. When you apply for a home loan, ask whether the account fee is negotiable or part of a packaged arrangement. Lenders occasionally discount or remove these fees during promotions or for specific borrower profiles, but you'll need to ask rather than assume.
Package Fees and Bundled Features
Many lenders offer a home loan package that bundles multiple features under a single annual fee, typically ranging from $300 to $400. These packages often include an offset account, unlimited additional repayments, and discounted interest rates. The package fee is charged once per year and applies across all loans within that package, so if you hold both an owner occupied home loan and an investment loan under the same package, you'll pay the fee only once.
Consider a borrower with a variable home loan of $450,000 who pays a $395 annual package fee but receives a 0.60% rate discount. That discount saves roughly $2,700 per year in interest, making the package fee worthwhile. Without the package, the same borrower would pay a higher variable interest rate and potentially separate fees for each feature. When you compare rates, factor in both the package fee and the discount to understand the actual cost.
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Transaction and Feature Fees
Some variable rate products charge transaction fees for specific actions. Common examples include redraw fees, which can range from $10 to $50 each time you withdraw extra repayments you've made, and additional statement fees if you request paper copies or historical records. A linked offset account is usually included in packaged loans but may attract a separate monthly fee on basic variable products.
If you plan to make frequent additional repayments and later access those funds, check whether your loan charges a redraw fee or caps the number of free redraws per year. A loan with no redraw fees but a slightly higher interest rate may cost less overall than a lower-rate product that charges $25 every time you need to access your surplus. This becomes particularly relevant if you're using your loan to build equity over time while maintaining liquidity.
Exit and Discharge Fees
When you pay out your variable rate loan or switch lenders, most products charge a discharge or settlement fee. This fee typically sits between $300 and $500 and covers the legal and administrative work required to remove the mortgage from your property title. Unlike fixed rate products, variable loans don't usually carry break costs if you exit early, but the discharge fee still applies.
If you're considering refinancing within the first few years, factor in the discharge cost from your current lender and any application or settlement fees charged by the new one. A portable loan feature, available on some variable products, allows you to transfer the loan to a new property without discharging it, which can save the exit fee if you're upgrading or relocating. Not all lenders offer portability, and those that do may still charge a small fee to process the transfer.
Comparing the Full Cost Across Lenders
When you compare home loan rates, calculate the total annual cost rather than focusing solely on the interest rate. Take the advertised variable home loan rate, add the monthly account fee multiplied by 12, and include the annual package fee if applicable. Then multiply your loan amount by the interest rate to estimate your yearly interest, and add all fees together.
In our experience, borrowers often assume the lowest advertised rate delivers the lowest overall cost, but a lender offering a rate 0.10% higher with no package fee and no account keeping fee can work out cheaper than a heavily discounted rate buried inside a $400 annual package. This comparison becomes more valuable as your loan amount increases, because a small rate difference has a larger dollar impact on bigger balances. Access home loan options from banks and lenders across Australia, and compare the full cost structure rather than the headline figure.
How Fees Affect Your Borrowing Capacity
Lenders include ongoing fees when they calculate home loan repayments for serviceability purposes. If you're applying for a home loan and your borrowing capacity sits close to the lender's limit, choosing a product with lower ongoing fees can improve your serviceability. A $15 monthly account fee plus a $395 annual package fee adds roughly $575 per year to your committed expenses, which reduces the amount you can borrow by a small margin.
This becomes more relevant for buyers stretching their budget or those with other debts affecting their serviceability. Removing a package fee by selecting a basic variable product might lift your maximum loan amount slightly, though you'll need to weigh that against the loss of features like an offset account or rate discount. If you're seeking home loan pre-approval, ask whether the fees have been included in the assessment and whether switching to a lower-fee product would change your approved amount.
Rate Discounts and Fee Waivers
Some lenders offer interest rate discounts for new borrowers or for those refinancing from another lender. These discounts may come with conditions, such as maintaining a minimum loan balance, holding other accounts with the lender, or keeping the loan for a set period. If you don't meet the conditions, the discount may revert, and the variable interest rate will increase.
Rate discount offers often appear alongside waived application fees or reduced package fees for the first year. Read the terms carefully to understand when the discount ends and what the rate reverts to. A 0.50% discount that applies for two years before reverting to the standard variable rate might still deliver value, but only if the revert rate remains competitive or if you plan to refinance before the discount expires. Lenders rarely advertise the revert rate prominently, so ask for it directly during your home loan application.
Call one of our team or book an appointment at a time that works for you. We'll help you compare the full fee structure across lenders and find a variable rate loan that fits your situation without hidden costs.
Frequently Asked Questions
What fees do variable rate home loans usually charge?
Most variable rate loans charge a monthly account keeping fee, typically between $8 and $15, plus an annual package fee if you bundle features like an offset account. Transaction fees may apply for redraws or additional services, and a discharge fee of $300 to $500 applies when you pay out the loan.
Are package fees worthwhile on variable home loans?
Package fees, usually $300 to $400 per year, can be worthwhile if they include a rate discount and features you'll actually use. A 0.60% discount on a $450,000 loan saves roughly $2,700 annually, making the package fee good value.
Do variable rate loans charge break costs when you exit?
Variable rate loans don't charge break costs if you pay them out early, unlike fixed rate loans. However, you'll still pay a discharge or settlement fee, typically between $300 and $500, to cover the legal and administrative work.
How do ongoing fees affect borrowing capacity?
Lenders include ongoing account and package fees when calculating your serviceability. A loan with lower fees slightly improves your borrowing capacity, which can matter if you're close to the lender's limit or have other debts.
What should I check when comparing variable home loan fees?
Calculate the total annual cost by adding the interest rate, monthly account fees, and any package fees. Compare this figure across lenders rather than focusing only on the advertised rate, as a slightly higher rate with lower fees can cost less overall.
