What are Home Loan Comparison Rates & How to use them
When you are considering a home loan there are a variety of things that you should look at. There are many things that will cost you money with a home loan, however the main feature of a home loan that will cost you money will be the interest rate. It is very important for you to compare the interest rate of home loans as you may find that there are other products with lower interest rates that will save you money. This article will explain what a comparison rate as and what it represents. Furthermore, this article will explain how the comparison rate will be calculated and what they will cover.
What are the Comparison Rates
The comparison rates are always advertised next to the interest rate of a product. This section of the article will explain what the comparison rates are:
- Interest rate. Interest rates are the main factor that will affect how much that you pay onto the loan. However, each provider will offer a different interest rate.
- Comparison rate. The comparison rate is the cost of a loan including ongoing fees and charges, expressed as a percentage. The comparison rate will allow you to compare the interest rate that is offered with the loan you are considering to other loans on the market because it is law that providers show a comparison rate when displaying their interest rate.
How are the Comparison Rates Calculated
We have learned that that comparison rate allows you to compare interest rates. This section of the article will tell you how they are calculated:
- Interest rate. The interest rate that is charged to the loans is the main feature of the calculation.
- Fees and charges. Some of the fees and charges that will be charged with the other loans will be taken into consideration when calculating the comparison rate. Be warned that some fees or charges may not be included in the calculations.
- Amount borrowed. The comparison rate that is calculated will take into account the amount of money that will be borrowed. This is particularly important if the interest rate will vary when you borrow more.
- Loan term. The amount of time you take to pay off the loan will be included in the calculation of the comparison rate.
- Repayment frequency. Depending on how you repay the loan the amount you have to pay may vary. If you pay off the loan monthly and interest is charged weekly then you will end up paying more interest compared to weekly repayments. The comparison rate calculation will take into account the way you repay the loan.
Do the Comparison Rates Calculate Everything?
While the comparison rate calculation will take most things into account there are some things that will be left out. These features are:
- Government charges. When you buy a house you will be charged a variety of government charges. These can include charges such as stamp duty and these charges will not be covered in the comparison rate estimates.
- Fees. Some fees and charges may change over time and depending on when you apply for the loan they may be different. The fees and charges that cannot be estimated will not be included in the calculation.
The comparison rate is a great way for people to compare the interest rate of other loans that are similar to the one you are considering. While the comparison rates will include many of the features that will determine the amount you will pay there are some charges that will be left out.
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Top Home Loans
| Home Loan | Details | Interest Rate (p.a.) | Comp Rate^ (p.a.) | App Fee / Ongoing Fee | Max LVR | Min & Max Borrowing | |
|---|---|---|---|---|---|---|---|
 Loans.com.au - Dream Catcher​ | A home loan offer with a $0 application fee and one of the lowest available home loan interest rates. | 5.85% | 6.21% | $0 / $375 | 80% | $50,000 / $750,000 |
 
|
 Bankwest Online Home Loan | A low interest rate home loan with a $0 application fee and ongoing maintenance fees. This offer is exclusively available by applying online. | 5.97% | 5.97% | $0 / $0 | 80% | $100,000 / $1,000,000 |
|
 Illawarra Home Loans Bank Beater Home Loan | A low variable rate, beaten down even further by 0.05% p.a. after 5 years. | 6.07% | 6.35% | $0 / $345 | 90% | $250,000 / $1,000,000 |
|
 State Custodians Mortgage Company Standard Variable Offset Loan | Awarded the 2011 Non bank Lender of the Year this feature-packed loan rewards customers with a bonus rate drop of 0.25% after 5 years. | 6.02% | 6.23% | $0 / $345 | 95% | $150,000 / $1,000,000 |
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