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Home Loan Comparison Rate


RateCity Staff

RateCity Staff


What is the Home Loan Comparison Rate?

The home loan comparison rate is also known as the ‘real rate’, the ‘Annual Average Percentage Rate’ or ‘AAPR’. It calculates the average rate including any ongoing or upfront fees over the life of the loan. This is especially handy if you are fixing part of your loan or have an introductory rate as the lender may increase the interest rate dramatically following the fixed period. The other rate you often see is called the ‘advertised rate’ or the ‘headline rate’ which generally does not include these extra fees and charges.

When to use the Home Loan Comparison Rate?

When comparing home loans, you should always compare the comparison rate rather than the advertised interest rate. The advertised interest rate will not necessarily be the rate that the lender will offer you because most advertised interest rates are calculated on a loan of $150,000 over 25 years. If you plan to borrow more or less than $150,000, then you should compare the comparison rate of the loan as you may have a better rate by borrowing more money.

Some lenders are now trying to ensure the comparison rate is the same as the advertised rate which will be great for consumers as it will remove this source of possible confusion from the market.

Australia’s leading home loan comparison website, RateCity.com.au, will always show you the comparison rate for home loan products when compare fixed rate home loans, variable rate home loans, low doc home loans or simply use our great home loan calulator to find a great home loan deal.

For more information read the Home Loans Guide published by RateCity.com.au.

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