All lenders have fees associated with their home loans – and some more so than others. By using RateCity’s home loan fee calculator you’re able to look for competitive interest rates, but also the ‘comparison rate’, which calculates the amount of fees and charges you may be slapped with over the life of a home loan.
The comparison rate
The comparison rate estimates most additional fees and charges, such as upfront or ongoing costs, which is especially important to know if you’re looking for your first home loan.
Some home loans can appear cheap, based on the advertised interest rate only. Yet when all fees are tallied, may actually prove pricey. The comparison rate, which estimates these fees, delivers a more factual picture of home loan costs.
Moreover the lenders are obliged to include comparison rates in home loan advertising to help consumers determine a ‘truer’ cost of the loan. Be aware that the comparison rate offers a pricing comparison only, and doesn’t take into account imposts like early repayment fees or government charges.
That said, by basing a decision on comparison rates only, you run the risk of overlooking some of the special features and benefits offered by individual home loans. At the same time, be sure to check the terms and conditions. Consult our home loan fee calculator and compare financial institutions offering home loan benefits such as ‘redraw facilities’.
Comparison rates don’t take into account features such as repayment flexibility via the likes of redraw facilities and offset accounts, which vary widely, but can also significantly reduce the total cost of a home loan.
With a redraw facility, if you pay more into your home loan than the minimum monthly requirement, you can retrieve some of the surplus loan repayments you have made if a financial requirement or emergency arises.
Also there may be fees with a redraw facility – and be sure to refer back to compare home loans to determine if a redraw facility is right for you.