Comparison Rate Calculator

What is the difference between the advertised interest rate and the comparison rate?

The interest rate is the rate the lenders use to advertise their home loan products. This is the rate they charge for borrowing money and is charged on the loan balance per year. This influences how much your minimum monthly loan repayment will be.

On the other hand, a comparison rate is not just the interest rate, but also includes the fees and charges associated with the loan. Because of this, the comparison rate displays the total overall cost of the home loan.

What are some of the charges included in the comparison rate?

As comparison rates include all fees and charges on a loan, here is what lenders are likely to include when calculating the comparison rate: 

Upfront fees

• Application fee
• Pre-approval fee
• Valuation fee
• Documentation preparation fee
• Legal fee
• Settlement fee

Monthly fees

• Monthly account fee
• Annual package fee
• Periodical admin fee

Discharge fees

• Discharge administration fee
• Documentation preparation fee
• Settlement fee

Is there anything the comparison rate does not take into account?

Government charges such as stamp duty and conveyancing fees are not included in comparison rates. Some other charges that are not factored in are fees that may or may not happen in the future such as redraws, late or early repayment fees, and early exit fees when you decide to change lenders.

Are comparison rates useful when comparing fixed rate products?

A fixed-rate loan will have a fixed interest rate over an agreed term, usually up to five years. After the fixed term, the interest rate will roll onto a variable interest rate. Using a comparison rate may help compare fixed rate products because this lets you know what the average cost of the loan will look like per annum.

A comparison rate calculator can help you compare different home loan products and see how much you can save from different lenders. 

This can let you know what your fixed monthly repayment may be, your ongoing repayment, the total interest payable, total fees, and the total overall cost of the loan

What guidelines are used when lenders calculate the comparison rate?

Different loan amounts will have different comparison rates, however, lenders are generally required to calculate the comparison rate on a home loan of $150,000 with a term of 25 years, and with principal and interest payment. 

Is the comparison rate an accurate reflection of the 'true cost' of the loan?

As the comparison rate includes the interest, fees, and charges, it does reflect the true cost of a loan, and makes it easier to see which lender offers the most cost effective option for you.

Since the comparison rate is generally calculated at $150,000 for 25 years, it may not be accurate to your exact situation; especially as the average home loan in Australia is nearly $500,000.

The advertised rate can be a quick, useful way to compare different loans. However customising the comparison rate with our comparison rate calculator will help show you a more accurate overall cost of the loan you are looking for, as it allows you to tailor the information based on your personal loan circumstances such as loan amount and loan term.

Do all loan products have a comparison rate?

All lenders in Australia are mandated by the Consumer Credit Code to include the comparison rate in their home loan products. This is done so lenders can be honest as to how much the home loan would be with their rates and charges.