What are the common types of fees associated with commercial property loans in Australia?


There are several common types of fees associated with commercial property loans in Australia. These fees vary depending on the lender and loan product, but here are some that you may typically encounter: 

Application fee: This is an upfront fee charged by the lender to process your loan application. It covers administrative costs such as credit checks and property valuations. 
 
Valuation fee: Lenders usually require a professional valuation report to determine the market value of the commercial property being used as collateral for the loan. The borrower is responsible for making this payment. 


Loan documentation fee: This fee covers the costs of preparing legal documents related to your loan, including mortgage contracts, guarantees, and other paperwork required by both parties involved. 
 
Settlement fee: When your loan is approved and it's time to settle, there may be a settlement or conveyancing fee payable to cover administrative expenses incurred during this process. 
 
Ongoing account-keeping fees: Some lenders charge ongoing fees for maintaining your loan account throughout its term. These fees can be monthly or annual and contribute towards managing your account, providing statements, and customer support services. 
 

Break cost/Early repayment penalty: In case you decide to repay your commercial property loan before its agreed-upon term ends (either partially or in full), some lenders impose break costs or early repayment penalties based on predetermined formulas outlined in their contract terms. 
 
Default/late payment fees: If you fail to make scheduled payments on time or surpass certain defined limits without prior arrangement with the lender, they may charge default or late payment fees. 
 
Lenders Mortgage Insurance (LMI): For borrowers who have less than 20% deposit saved up for their commercial property purchase price, LMI might apply. This insurance protects the lender from financial loss if you default on your repayments; however, the premium cost will increase overall borrowing expenses. 
 
It's important when considering a commercial property loan in Australia to review the terms and conditions provided by different lenders, as these fees can vary significantly. Make sure you understand all associated costs before committing to a loan and consider seeking professional advice from a financial advisor or mortgage broker to ensure you make an informed decision that meets your specific needs and circumstances. 

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