You're at the final stage of buying your dream home. The paperwork is signed, the home loan is approved, and settlement is around the corner.

But then, you get hit with an unexpected cost – a mortgage registration fee. What is this fee and why do you have to pay it? Let's break it down.

What is a mortgage registration fee?

A mortgage registration fee is a government charge, like stamp duty. However, unlike stamp duty, it's not a tax – it covers the cost of registering your mortgage with the state or territory land titles office.

As the name suggests, a mortgage registration fee is charged to register a mortgage, which officially documents your lender's interest in the property being purchased.

When you take out a home loan, your property acts as security for the lender. If you default on your repayments, the lender has the right to repossess and sell the property to recover your debt.

Lenders secure their claim to a property by registering the mortgage, formally establishing their legal interest in it.

When do I need to pay the mortgage registration fee?

The mortgage registration fee is typically paid at the time of settlement. Your lender will likely pay the fee itself and ask you to reimburse it.

If you were to refinance your home loan, you would also need to pay a mortgage registration fee for the new home loan, as well as a mortgage discharge fee to close your old mortgage.

How much is a mortgage registration fee?

Mortgage registration fees differ between states and territories. As of financial year 2024-25, they're generally in the range of $160 and $230.

Here's what you might be up for if you're taking out a mortgage on an Australian property:

State/Territory Mortgage Registration Fee in 2024/25
NSW $171.70
Victoria $122.10 for electronic transactions
$131.90 for paper transactions
Queensland $231.98
South Australia $192
Western Australia $210.30
Tasmania $159.88
ACT $172
Northern Territory $172

Do you need to pay a mortgage registration fee when refinancing?

Yes, when refinancing, your old lender's mortgage must be removed from your property's title, and your new lender's mortgage must be added. This means you'll likely pay two fees:

  • A mortgage discharge fee (typically $200-$400)
    to remove the old lender's mortgage

  • A new mortgage registration fee ($160-$230)
    to register your new loan with the state or territory land titles office

Can you avoid paying a mortgage registration fee?

Unlike some fees and charges that you might be able to barter down, the mortgage registration fee is generally unavoidable.

Registering a mortgage ensures the lender can repossess the property if the buyer can't meet their home loan repayments. Thus, you'd be hard pressed to find a lender willing to let the mortgage registration fee slide.

What happens if a mortgage is not registered?

To explain why mortgage registration is necessary, we need to break down what a mortgage actually is.

Contrary to popular belief, a mortgage isn't technically a loan. Rather, it's the agreement that, if a property owner fails to live up to their side of a bargain the lender can take ownership of the property and sell it to recoup its losses. The bargain being agreed to is generally that the borrower will repay their home loan in regular installments.

By registering the mortgage on your property, your bank or lender ensures it can take ownership of the property if you default on your home loan.

If your mortgage isn't registered, it might not have the same legal rights. Or, it may have to jump through many legal hoops to prove it has an interest in the property.

For example, imagine a property owner takes out a second loan using their home as security but fails to register the new mortgage. If they default and the property is repossessed, the first lender (whose mortgage was registered) will have legal right to the property, while the second lender may be left with nothing.

Does mortgage registration protect borrowers?

From a borrower's perspective, it might not seem like a major issue that a lender would struggle to repossess their home if push comes to shove. However, few, if any, lenders would approve a mortgage without securing its legal right to claim the property if necessary.

Additionally, the mortgage registration process can bring issues to the surface. For instance, a paperwork mistake might mean a previous owners' mortgage is still registered to your property, leaving another party with a legal interest in the home. This could prove catastrophic if you were to purchase the property without realising. Chances are, such a mistake would need to be rectified before settlement.

Image by wayhomestudio on Freepik 

Collections: