Comparison Rate Calculator

Find out the true cost of your home loan’s fees and interest with Savvy’s home loan comparison rate calculator

Last updated on April 20th, 2022 at 04:36 pm by Cate Cook

Home loan comparison rate calculator

Securing a great rate on your home loan is crucial, but it’s just as important to know about the cost of its fees.  Use Savvy’s comparison rate calculator to calculate how much home loan fees will add up to over the years.  Unlock the secrets of home loan interest comparison rates with our simple calculator today.

Comparison rate calculator explained

How do I use the comparison rate calculator?

The comparison rate calculator needs just a few inputs from you to be able to calculate the comparison rate of your loan.  First of all, enter your loan amount and term in years.  If you have an introductory interest rate on your loan, add this in alongside its term length.

Next, enter the revert interest rate which applies to your loan and the upfront fees plus any ongoing fees which your lender may charge.  Use the green arrow to change the payment frequency of any ongoing fees from monthly to quarterly, half-yearly or annually.  Click anywhere on the home loan comparison rate calculator to see your results.

You can use the interest comparison calculator to see what your monthly repayments will be when different interest rates are applied.  You’ll also be able to see how much the loan fees will add up to over the life of the loan, as well as the total interest payable.

What fees are charged for home loans?

Fees that are charged for home loans fall into three basic categories, as seen in our calculator:

Upfront fees

Also called loan application fees or establishment fees, upfront fees are charged when you first set up your loan and cover the lender’s costs to establish and register the mortgage.  They range from $200 to $700. 

Ongoing fees

Ongoing fees have a range of names: account keeping fees, monthly service fees and annual fees are all included in this category.  Monthly service fees range from $5 to $25, whereas annual fees are generally between $250 and $600.

End fees

Commonly known as closing or discharge fees, these are applied at the conclusion of your home loan when you’re ready to close out your account.  Similarly, these can vary in cost from $150 up to around $400.

Additional fees which may also be applied, but not included in comparison rate calculations, are:

  • loan switch fees, which can be applied when you refinance between a fixed rate and variable interest rate loan with the same lender (often in the region of $250-$400)
  • rate lock fees, which can be charged when you wish to lock in a fixed interest rate on your loan for a set period. Rate lock fees are often between $300 and $700 or even higher

Should I always use the comparison rate to compare home loans?

Yes – Part 10 of the National Credit Code requires all credit providers to display a comparison interest rate, expressed as an annual percentage rate.  The comparison rate is based on a $150,000 loan taken out over a 25-year term.  All relevant fees are added to the loan so consumers can see the true cost of the loan.

A loan’s comparison rate is the most accurate way to compare loans, but it doesn’t account for government fees (such as stamp duty or mortgage registration fees) or additional charges that are only charged in certain circumstances.  

The comparison rate ensures that lenders can’t advertise a low interest rate, only to charge excessive fees which bump up the overall cost of the loan.  For example, a lender could advertise an interest rate of 1.99% p.a., but charge an annual $400 loan package fee, plus $25 a month account keeping fees.  This could make the loan more expensive overall than another loan with an interest rate of 2.20% but no administration, annual or account keeping fees.

Top tips for getting the lowest comparison rate loan

Use Savvy to compare home loans

Savvy compares the comparison rates of home loans and presents those comparisons side-by-side so you can clearly see which home loan is the right one for you. Comparing offers helps you make a more informed and accurate decision on which home loan is the best and most affordable. Savvy’s comparisons are free, and a quick quote will not be registered on your credit file.

Provide the largest deposit possible

The more deposit you’re able to offer, the lower the comparison rates which become available to you.  Some of the lowest interest rates available in Australia are only available if you offer more than 30% or 40% deposit in relation to the cost of the property you wish to purchase.

Make sure you have a good credit score

The better your credit score, the more chance you have of lenders offering you their lowest rates, as these are usually reserved for premium, low-risk clients.  Your credit score doesn’t have to be perfect, but the better the score, the better your chances of a low rate.  It’s always a good idea to check your credit score before applying for a loan, and get rid of any unused lines of credit or credit cards.

Stay in one job to prove your employment is stable

Your credit score will be maximised if you are in the same job for a considerable period, which indicates stability of employment.  Changing jobs just before you apply for a new loan is not a good idea, as some lenders stipulate you must have been in the same job for at least three to six months to be accepted for a home loan.

Ask a parent or close relative to act as a guarantor for you

Your chances of being offered a low comparison rate are increased if you apply for a loan and offer a family member as a guarantor for your loan.  Your guarantor will have to be prepared to submit their financial details to your lender and should be in a strong financial position with home equity behind them.

Look out for low or no-fee loans

In a highly competitive home loan market, many lenders are now offering very low fees or even no application fee loans.  Take advantage of these low-cost options to keep the overall cost of your home loan down.  While some lenders require a deposit higher than 20% of the total purchase price to qualify for these low-fee loans, other lenders offer them for loans with the standard 20% deposit.

Comparison rate frequently asked questions

Is there a limit to the cost of ongoing fees a lender can charge in Australia?

No – there are no legal limits to what a lender can charge in ongoing fees for a home loan, but market competition, online lenders and open comparisons tend to be natural regulators which keep a lid on additional fees.

Why are comparison rates calculated on a $150,000 loan taken over 25 years? 

The National Credit Code specifies that a loan’s comparison rate is based on these assumptions to ensure that all home loans in Australia are measured using the same consistent metric as a basis for comparison.

Will I pay less on my home loan if I choose a shorter repayment term?

Most likely, yes – the sooner you pay off your home loan, the less interest you stand to pay overall.  This is because of the way in which interest is calculated, which is based on the loan amount outstanding, so the faster it reduces, the less interest you’ll pay.  Additionally, a shorter term will mean fewer overall monthly or annual fee charges, saving you further money.

Is a basic variable loan the same as a standard variable loan?

Not always – a basic variable loan tends to be the cheapest home loan a lender will offer, but it comes with no additional features. These are often called ‘no frills’ loans.  On the other hand, a standard variable loan may have a slightly higher interest rate, but additional features such as offset accounts, redraw facilities, split loans and additional repayments are frequently packaged with such loans.

Are loan exit fees factored into comparison rates?

No – by law a loan’s comparison rate does not include any early exit fees or break fees, because these are not standard payments, but additional payments which a borrower may choose to incur if they break the lender’s fixed term agreement. These fees don’t apply to variable rate home loans, though.

Should I look for a low introductory comparison rate? 

Yes – a low introductory comparison rate will save you money overall because you will pay less interest, but make sure the revert rate of the loan is comparatively low as well, because this is the interest rate you’ll be paying for the majority of the loan.