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Comparison Rate Calculator

All advertised home loans will have a comparison rate, using this calculator will allow you to calculate your own comparison rate.

Giving you peace of mind that you are comparing like for like loans.

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All advertised home loans will have a comparison rate. Using this calculator will allow you to calculate your own comparison rate. giving you peace of mind that you are comparing like for like loans.

What is a comparison rate?

A comparison rate is a rate for a loan term that includes all possible fees and charges as well as the interest rate. This is different to a normal interest rate that does not take into account any extra costs. 

A comparison rate aims to show customers the true cost of a loan and be able to compare different loans and services offered. These additional fees and charges can include:

Upfront fees:

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

Ongoing fees:

  • Monthly or annual service fees
  • Package fees

Discharge fees:

  • Discharge admin fees
  • Documentation preparation fees
  • Settlement fees

This can be helpful for you to determine which home loan is right for you, taking into account all the fees and charges.

What isn’t covered in a comparison rate?

While a comparison rate aims to show the true cost of a loan and includes all possible fees and charges, there are some charges attached that cannot be included in a comparison rate. These costs include:

  • Government charges such as stamp duty or mortgage registration fees.
  • Fees and charges associated with specific loan options. This is because these options may not be used by the borrower, such as early repayment or redraw fees.
  • Fees or charges that are not available at the time the rate is provided.
  • Savings on costs such as fee waivers or availability of offset interest arrangements. It also does not include costs for late payment fees or other charges based on failing to reach repayment terms.
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Understanding comparison rates

Using a comparison rate to view the different options for home loans will make it easier to evaluate the true cost of each loan available. Compared to viewing just an interest rate, you may not be able to view the whole or true amount that you will have to pay off.

For example, you view a lower interest rate for an owner occupied home loan, but the comparison rate may be quite a bit higher, and may cost more due to establishment fees, ongoing fees or even a special rate period.

The benefit of a comparison rate, and additionally, a comparison rate calculator, is that you will not miss any ongoing fees or alternative charges that may be required once you begin paying off your home loan. As a result, it is a great way to compare loans when you are looking to refinance or are considering a new home loan.

How to calculate a comparison rate

Comparison rates that you see advertised are only an indication of how much a loan will truly cost. Lenders have to make a few assumptions when providing a comparison rate as it has to encompass every possible scenario.

This means that the comparison rate for a home assumes that the interest rate will not change over the life of the loan, however, if you do not have a fixed rate home loan, then the comparison rate will increase and decrease in response to Reserve Bank of Australia decisions or decisions made by your lender.

In addition to possible interest rate changes, comparison rates do not take into account personal financial situations and decisions. This means that most comparison rates shown are usually based on the average loan amount of $150,000 and loan term of 25 years, with principal and interest repayments made monthly. If your chosen home loan and financial situation are not the same as this loan amount or loan term, then your comparison rate will be different from the shown example.

Because of these possibilities, it is always recommended to use the Homestar Finance comparison rate calculator to get an accurate depiction of what your comparison rate will look like.

Things you should know

It is important to know that the result from this comparison rate calculator is only an estimate based on the information you provide. It does not take into account any additional fees and charges that are not covered in a normal comparison rate.

Because it is only an estimate, it does not necessarily reflect the result you may get when you complete a proper application. The comparison rate calculator does not serve as a pre-qualification for a loan approval or application.

This calculation is also based on current interest rates and lending criteria, which are subject to fluctuation and may change at any time. Calculations are therefore meant only as estimates, and it is always advised that you speak with one of our loan specialists for a more in-depth evaluation of your circumstances.

How this comparison rate calculator works

The comparison rate calculator helps you estimate the true cost of your loan, as it includes not only the loan amount and interest rate, but also all extra fees and charges that may apply. This calculator uses information you enter based on the loan amount, loan term and ongoing fees you wish to pay.

How is my comparison rate calculated?

Your comparison rate is calculated using information you put in on the interest rate, loan amount and loan term you wish to have. It also considers the following additional charges and fees:

  • amount of the loan
  • loan term
  • monthly repayment frequency
  • interest rate
  • fees and charges

What’s the difference between the interest rate and comparison rate?

The difference between an interest rate and a comparison rate is that an interest rate does not include any of the additional fees and charges that may be attached to your home loan.

A comparison rate aims to cover the whole or true cost of a loan, with the rate reflecting the total cost of interest plus additional fees and charges attached.

Why is the comparison rate lower than the interest rate?

There are a few ways that a comparison rate can actually be lower than the advertised interest rate.

Loans that come with an introductory discount rate or those that have an annual discount offer or 0.0%p.a. will usually have a lower comparison rate to interest rate.

On fixed rate loans that revert into a cheaper variable rate, the advertised comparison rate will be lower as well. For example, if the loan has a 5-year fixed rate of 5.99%p.a. but the current variable rate is 4.00%p.a., the comparison rate would be lower as 20 years of the calculation would use the cheaper variable rate.

Check out our other home loan calculators

Working out potential home loan repayments? Looking at loan refinancing options? Just curious? Our range of calculator tools can help you make informed decisions on the best products or offerings to add value, reduce repayment stress and save money.

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