Lender's exit fees have recently come under fire, with the Rudd Government calling for a treasury report on the banking sector. With the jury still out, the debate rages on both sides about whether borrowers should be paying fees for exiting a home loan.

While Federal Treasurer Wayne Swan has said publicly that exit fees may unfairly penalise borrowers for shopping around to get a better deal on their home loans, proponents argue that all lender fees are disclosed before contracts are signed, giving borrowers the opportunity to find the best deal that suits their circumstance.

Australian Bankers Association chief executive David Bell has stated that exit fees allow banks to protect themselves from borrowers who are higher risks. When a mortgage is established to a new customer, banks have to make sure the borrower can pay it back. If a borrower exits from a loan early, the bank needs a way to recoup the cost of discharging the mortgage.

Until this issue is resolved, the most important advice I can give you about exit fees is to know exactly what they are before you sign a loan. I will help you identify these fees, which typically have names such as deferred-establishment fee, early-termination fee, loan-termination fee, discharge fee or documentation fee.

The fees generally kick-in if you leave the loan within the first 3 to 5 years and can take the form of a flat-rate, a specified number of months interest or a percentage of the outstanding balance. Percentage-based fees commonly end up costing significantly more than flat-fees.

Exit fees are just one of the many reasons why it makes sense to plan ahead before choosing a home loan. Consider in advance how long before you plan on repaying the loan as this will impact on your choice of product. If you are able to commit to keeping a loan for five years, for example, it may be better to opt for a loan that has high penalties for breaking within the first five years but much lower fees or interest during that time. The total cost of a loan product - not just one particular fee - is what you need to consider in light of your individual situation and future plans.

As a member of the MFAA it is an integral part of my professional service to openly explain all the costs associated with any finance I help arrange for you. Please use my expertise to help you find a great loan that meets your needs in the short and long term, whilst working to minimise the total cost of the loan.

You might not be aware of it, but your spending patterns today may shape your chances of securing a loan in the future. Before a lender will approve a loan, they will first check your credit history to confirm that you are an acceptable risk that meets their lending criteria.

This information is compiled by a credit reporting agency and includes past and current credit accounts and their balances, your payment history, previous credit problems and your pattern of employment and residence. The lender will combine this information with the supporting documents you have provided to form a detailed picture of your credit worthiness.

Your chosen credit provider will use this information to credit score your mortgage application which will play a major role in determining whether it is successful.

A clean credit report and current financial statements ensure a fast and easy loan process. If on the other hand, you've had your phone cut off, written bad cheques or missed car repayments, you could be refused a loan or charged a higher interest rate.

The guide to formulating your credit approval varies from lender to lender so it pays to keep your credit file squeaky clean to maximise your choices. Payment histories make up a sizeable part of your credit file, so avoid making late repayments on a debt, or worse still, missing them altogether. Exceeding your credit card limit, declaring bankruptcy or not paying your taxes can also put black marks against your name.

Unfortunately credit reports can sometimes contain errors, so keep an eye on your credit file and report any irregularities. To obtain a copy of your file or clear up incorrect information, contact Australia's credit reporting agency, BayCorp Advantage (where files can be obtained for free or at a small fee).

Sometimes your credit rating may be affected by a debt which you are unaware of. An example of this may be an old mobile phone account debt that you may have missed paying due to moving house and not receiving your bill.

If you are worried about a less than perfect credit history, your best course of action when applying for a loan is to be as honest as possible. My role is to present your side of the story to the lender should this occur. It is much better to be honest in a credit application about your known credit issues, and provide reasonable explanations for any blemishes with the application. Your chances of success may be better than if you did not disclose an issue and the lender discovers it on your credit file.

You can be confident that I will put in my best effort to acquire your loan, regardless of your credit history.

Never judge a house by its appearance as you don't know what building defects or pest problems might be hiding under a fresh coat of paint. Whatever the appearance of the home you are thinking of buying, it is important to get a building and pest inspection done.

Understanding as much as you can about the condition of the property before you buy will tell you where you stand and help avoid nasty surprises down the track. It also puts you in a strong bargaining position and ensures the price you pay takes any potential home repair costs into account.

Remember when selecting a building or pest inspector; make sure you choose a licensed expert with appropriate experience and qualifications.

Building inspection

The building inspection should cover the interior and exterior of the building, the roof space, underfloor space, the exterior of the roof and the site itself.

You will receive a report that outlines the condition of the property and highlights any significant building problems like rising damp or cracked walls.

The cost of repairs and minor defects may not be included in the report.

You will also need to obtain a pest report as a building report will not detect termites.

Pest inspection

The cost of repairing termite damage to your home can run into many thousands of dollars. To make matters worse, most home insurance policies do not cover damage by termites and other timber pests.

Termites will enter a house unseen and will attack and destroy timber wall frames, roof timbers, kitchen cupboards, door frames, carpets and even furniture and books.

Since they remain hidden in the wood, and enter your home underground, it is not unusual to not even realise they are there until the timbers collapse and the damage becomes extensive.

By commissioning a pest inspection before you buy a home you can find out about both current and past infestations. A pest inspection may detect borers and termites and provide you with a written report outlining the extent of the damage.

Sometime reading the reports can be quite daunting. In my experience the best approach is to organise another inspection of the property when you have the reports in your hands.

Take your time to review each item in the reports whilst looking at the property in person. Are the faults pointed out by the reports issues you are happy to accept, given the price you are willing to pay for the property? You can also get quotes for the costs of repairs to help in your decision. Proper due diligence when buying a property can save you on making a costly mistake. Looking at the positive side a less than perfect building report may be a great opportunity to renegotiate and strike yourself an even better deal on the property you have already fallen in love with.

Please note the information contained in this article is general information which has not been prepared by a qualified pest and building inspector and should not be relied upon.