The same term
Are you comparing like with like?
A lower rate over a longer term can cost more overall. Set both loans to the same term before the comparison means anything.
CALCULATOR
Which of these two loans is actually cheaper?
Headline rates are designed to be compared. Total cost is not.
RUN THE NUMBERS
Compare two loans properly
Enter the rate, the term and the fees for each loan. The total cost over the term is what separates them, and it is often not the loan with the lower headline rate.
Loan A
Application, settlement and valuation fees charged at the start.
A package fee often buys a rate discount. This is where you find out whether it is worth it.
Leave at zero if there is no introductory or fixed period.
Loan B
Difference over the term
$29,282
Loan A costs less
Total cost is every repayment plus every fee, over the term as entered. A shorter term always looks dearer here even when it is cheaper overall.
- Loan A — repayment
- $4,147.48
- Loan B — repayment
- $4,260.07
- Loan A — total cost
- $1,504,942
- Loan B — total cost
- $1,534,224
- Loan A — equivalent rate on these figures
- 5.96%
- Loan B — equivalent rate on these figures
- 6.15%
- Loan A$1,504,942
- Loan B$1,534,224
The equivalent rate above is worked out on the loan you entered. It is not a comparison rate — that term has a legal meaning and is calculated on a prescribed example of $150,000 over 25 years, which is why a lender's comparison rate will differ from this figure.
Have a broker check thisWhat this calculation assumes
- Total cost is every repayment plus every fee over the term you enter. Two loans of different terms cannot be compared on total cost alone — a shorter term always looks dearer here even when it costs less.
- An introductory or fixed rate is applied for the period you set, after which the loan reverts to the ongoing rate you entered. Real revert rates are often higher than the ongoing rate advertised alongside the honeymoon.
- The equivalent rate shown includes the fees you entered. It is not a comparison rate: that figure has a legal definition and is calculated on a prescribed example of $150,000 over 25 years.
- Offset accounts, redraw, split loans and repayment flexibility are not priced here, and they are often the reason a slightly dearer loan is the right one.
- Neither loan on this page is a product we are offering. They are whatever figures you type in.
WHAT IT TELLS YOU
Comparing loans means comparing total cost, not advertised rates
Two loans with the same interest rate can cost quite different amounts once establishment fees, ongoing package fees, offset availability and repayment flexibility are counted.
The comparison rate exists to help with this. It folds most fees into a single figure so products can be compared on more than headline interest — but it is calculated on a standard loan amount and term set by regulation, which may look nothing like yours.
The honest comparison is total cost over the period you actually expect to hold the loan, including the features you will genuinely use.
WHAT MOVES THE NUMBER
What to hold constant
All the fees
What sits outside the rate?
Application, valuation, settlement, ongoing package or account fees, and discharge fees at the end. Small annual amounts compound over decades.
Features you will use
Are you paying for something you need?
An offset is worth paying for if you hold a balance. If you do not, a package fee buying features you never touch is pure cost.
READING THE RESULT
An estimate is a starting point, not an answer
What the calculation covers
- Repayment differences between products — at the rates and terms you enter.
- Total interest over the term — which is where small differences accumulate.
- The effect of fees — where the calculation lets you include them.
What a lender does differently
- Comparison rates use standard assumptions — a set loan amount and term, not yours.
- Not every fee is captured — some government and third-party costs sit outside it.
- Features carry no dollar value in the maths — the benefit of an offset depends on your behaviour.
- Rates change — a variable comparison is a snapshot, not a forecast.
COMMON QUESTIONS
Questions about this calculation
What is a comparison rate?
A single figure combining the interest rate with most of the fees and charges attached to a loan, so two products can be compared on more than headline interest alone.
It is calculated on a standard loan amount and term prescribed by regulation, which is why it is a sanity check rather than a precise answer for your situation.
Why is the comparison rate higher than the interest rate?
Because it includes fees. The gap between the two tells you something useful: a wide gap suggests the product carries significant fees relative to its rate.
A very low advertised rate with a much higher comparison rate is worth looking at closely.
Is the lowest rate always the best loan?
Not necessarily. Loan structure, offset availability, the ability to make extra repayments and the lender's policy on your income type can all matter more.
The lowest rate on a product that will not approve you, or that lacks a feature you rely on, is not the better loan.
How do I compare a fixed loan against a variable one?
You cannot compare them purely on cost, because the fixed loan's future cost is known and the variable loan's is not. You are comparing certainty against flexibility.
The useful questions are how much certainty is worth to you, and what you would give up in offset access and extra repayments.
OTHER CALCULATORS
Other numbers worth running
GET IN TOUCH
Want the estimate checked against real lender policy?
Would rather talk it through?
(02) 9659 1694Important information
This page explains a calculation. Any figures you produce from it are estimates based on the assumptions described, not a quote, an offer of credit, or an indication that finance will be approved.
The information on this page is general in nature. It has been prepared without taking your objectives, financial situation or needs into account, so it is not personal advice and you should consider whether it is appropriate for you before acting on it.
Any rates, figures or examples shown are indicative only. Lending is subject to approval, and lender eligibility criteria, terms, conditions, fees and charges apply. Talk to us about what your own circumstances allow.