The comparison rate reflects the true annual cost of a home loan — including the interest rate and most fees. Use this calculator to compute a comparison rate from a loan’s advertised rate and key fee inputs.
Comparison Rate Calculator
What Is a Comparison Rate?
The comparison rate is a single annual interest rate that combines a loan’s advertised interest rate with most of its fees and charges. It gives borrowers a more accurate way to compare the true cost of different home loans.
Lenders in Australia are required by law to display a comparison rate whenever they advertise a home loan rate. This requirement is set out in the National Consumer Credit Protection Regulations 2010.
The Standard: $150,000 over 25 Years
By law, all comparison rates in Australia must be calculated on a $150,000 loan over 25 years. This standardised base means comparison rates can be compared across lenders — but it also means the comparison rate may differ significantly from the effective rate on your actual loan amount and term.
Why this matters: A $395/year annual fee on a $150,000 loan over 25 years adds approximately 0.24% to the comparison rate. The same $395 fee on a $600,000 loan adds only 0.06% — which means the comparison rate understates the fee impact on large loans.
Advertised Rate vs Comparison Rate — Real Examples
| Lender example | Advertised rate | Comparison rate | Difference | Likely fee |
|---|---|---|---|---|
| Major bank with package | 6.14% | 6.41% | +0.27% | ~$395/year annual fee |
| Online lender, no fee | 5.89% | 5.90% | +0.01% | Minimal |
| Fixed rate loan | 5.79% | 6.83% | +1.04% | High break costs + revert rate |
| Low advertised, high fee | 5.50% | 6.20% | +0.70% | High upfront or annual fee |
A large gap between advertised rate and comparison rate indicates high fees. A small gap indicates the fee structure is simple or cheap.
What the Comparison Rate Does and Doesn’t Include
Included in the comparison rate:
- Interest rate
- Application / establishment fee
- Monthly or annual account-keeping fees
- Settlement fees
Not included in the comparison rate:
- Government charges (stamp duty, mortgage registration)
- LMI premiums
- Offset account fees
- Break costs on fixed loans
- Redraw fees (if any)
- Valuation fees
Because the comparison rate doesn’t capture everything, it’s a useful benchmark — not a perfect measure of total loan cost.
How to Use Comparison Rates to Compare Home Loans
1. Use comparison rates as a filter, not the final answer. When comparing loans, sort by comparison rate to identify broadly competitive options. But then dig deeper into the specific fee structure.
2. Consider your actual loan size. If borrowing $700,000, a $395 annual fee has far less proportional impact than on a $150,000 loan. The comparison rate at the standard $150k overstates its cost.
3. Watch fixed rate comparison rates. Fixed rate loans often show high comparison rates because the revert rate (the standard variable rate after the fixed term ends) is included in the calculation. This inflates the comparison rate significantly. For fixed rates, focus on the fixed rate itself and separately understand what the revert rate will be.
4. Consider features. An offset account may have an annual fee that inflates the comparison rate — but the interest savings from offset may far exceed the fee. See our offset account calculator to model this.
5. Use a broker. Mortgage brokers have access to comparison tools across many lenders and can quickly identify which loan is genuinely cheapest for your specific loan amount, term, and requirements.
FAQ — Comparison Rates Australia
Why is the comparison rate lower than my interest rate sometimes?
This can occur with promotional rates or cashback offers — but is unusual. Normally the comparison rate is higher than the advertised rate, because fees add to the effective cost. If a comparison rate appears lower, check the fine print carefully.
Should I always choose the lowest comparison rate?
Not necessarily. The loan features — offset account, redraw facility, repayment flexibility — have financial value that the comparison rate doesn’t capture. A loan with a 0.1% higher comparison rate but a full-featured offset account may be substantially more cost-effective for your situation.
Is the comparison rate the same as an APR?
The comparison rate is similar to the Annual Percentage Rate (APR) used in the US and UK — both aim to capture the true annual cost of a loan. However, the Australian comparison rate is calculated at a fixed standard loan size ($150,000 over 25 years) rather than the actual loan, which can create distortions on larger or smaller loans.
For advice on which home loan best suits your situation, speak with a licensed mortgage broker. Find one through MoneySmart or the ASIC financial advisers register.