Home loan comparison: what actually matters

Most home loan comparison comes down to one number on a billboard. That number is rarely the number you will pay, and it is almost never the whole cost of the loan.

Start with the comparison rate, not the advertised rate

Australian lenders must publish a comparison rate alongside any advertised interest rate. The comparison rate folds most standard fees into a single figure, which makes it a fairer basis for comparing two loans than the headline rate on its own.

It is still an imperfect measure. Comparison rates are calculated on a standardised loan amount and term set by regulation, which may look nothing like your loan. Treat it as a better starting point rather than a final answer.

The four things worth comparing

• The rate that applies to you. Lenders price in tiers. Your loan-to-value ratio, whether the property is owner-occupied or an investment, and whether you pay principal and interest or interest only all move the rate you are actually offered.
• Fees over the life of the loan. Application fees, settlement fees, valuation fees and annual package fees add up. A slightly higher rate with no annual fee can beat a sharper rate that carries one.
• Features you will genuinely use. An offset account is valuable if you hold meaningful savings. If you will not use it, paying a package fee for it is a cost with no return.
• Flexibility. Redraw, extra repayments and split options matter if your circumstances are likely to change.

Why your existing loan drifts

Lenders compete hardest for new customers. Existing borrowers are rarely moved onto sharper pricing automatically, so a loan that was competitive when you settled can quietly fall behind the market over a few years. This gap is the single most common reason an Australian borrower is paying more than they need to.

Compare your own loan, not a generic example

Comparison tables are built on assumptions about a borrower who may be nothing like you. The useful comparison is between the rate you are on right now and what is realistically available for your profile.

Related comparisons

• Home Loan Comparison: what to compare beyond the headline rate
• Mortgage Rate Comparison: how Australian lenders actually set your rate
• Best Home Loan Rates: why "best" depends on your profile
• Cheapest Home Loan Rates: headline rate versus true cost
• Lowest Home Loan Rates: who qualifies for the sharpest pricing
• Refinance Home Loan Rates: the break-even maths
• About RateSearch: who is behind this tool

This page provides general information only and does not take your objectives, financial situation or needs into account. It is not credit assistance, a credit quote, or an offer of finance. Any rate you are offered depends on a full assessment by a lender. RateSearch is operated by Mango Financial Group, an authorised credit representative (CRN 530027) of Finsure Finance and Insurance Pty Ltd, Australian Credit Licence 384704.