What is a comparison rate?
When comparing home loans you will notice a comparison rate is showcased next to the interest rate. The comparison rate is a legal requirement for lenders to be displayed next to their advertised interest rates.
A comparison rate is helpful when determining the home loan that is right for you as it takes into account some of the fees and charges of the loan. It is intended to give you a better overview on the true cost of the loan compared to the interest rate.
What does a comparison rate mean?
The use of a comparison rate means it will make it easier for you to compare different home loan products available by multiple lenders. This can be due to the fact that a loan with a lower interest rate, may have a high comparison rate and cost more in the long term due to higher establishment fees, ongoing costs, or a special rate period.
Speak to your local Mortgage Choice broker today, to understand how comparison rates work further and ensure you are getting the best loan for your situation.