What is the difference between an interest rate and comparison rate?
An interest rate is the percentage at which the lender will charge you on the funds you have borrowed.
A comparison rate, however, considers the total cost of the loan. It's calculated to include:
- the interest rate
- the time it will take you to pay it back
- how often you are making repayments
- any fees and charges connected to the loan, like application or discharge fees
- based on an industry standard loan size of $150,000 and loan term of 25 years.
As the comparison rate factors in the full costs associated with a loan, it is generally higher than the interest rate. It's a legal requirement that all lenders display a comparison rate next to the interest rates they advertise.
What doesn’t a comparison rate include?
- Any fees associated with optional features, like an offset account
- Government fees and charge, including stamp duty, mortgage registration or land tax
- Lenders’ Mortgage Insurance
- Late payment fees.
Why should I pay attention to a comparison rate?
The comparison rate may give you a clearer picture of all the costs involved with the loan. If you notice that a comparison rate is a lot higher than the interest rate next to it, this might be a sign that there are some significant ongoing costs attached to the loan.
On the other hand, if the comparison rate is similar to the interest rate, this may indicate that there are minimal additional fees and charges, which could make the loan more attractive to you.
Remember – while comparison rates can be a good starting point for working out if a loan is a good fit for you, it’s not the only thing to consider. Take the time to learn about the features of the loan and whether the lender aligns to your values. What makes Beyond Bank different
Still have some niggling questions?
Loans can be confusing, which is why we’re here to make the complicated stuff simpler. You can call us on 13 25 85, visit a branch, or book a chat with a Lending Specialist.
Buying your first home?
Now that's exciting! If you need a hand learning the lingo or understanding the home buying process, check out the guides, tools, FAQs, and calculators available on our first home buyer hub.
We're an award-winning lender.
Recognition we've received for doing right by our customers.
Forbes World's Best Banks for 2024
Canstar's Customer Owner Bank of the Year, Digital Banking 2015 - 2024
Canstar's Customer Owner Bank of the Year, Most Satisfied Customers 2023
Help is here.
Please read this important information.
|
All applications for credit are subject to Beyond Bank’s credit assessment criteria. Terms and conditions are available on request. Fees and charges apply. This information is available on our website at beyondbank.com.au/about-us/corporate-governance/disclosures, by calling us on 13 25 85 to request a copy or by visiting a branch. |
|
|
This information is of a general nature only and does not take into consideration your objectives, financial situation or needs. The information must not be relied upon as financial product advice. Before acquiring any product you should read the relevant guides, Product Disclosure Document, and consider whether a product is suitable for your circumstances to decide if a product is right for you. |
|
|
All products and services are provided by Beyond Bank Australia Ltd, 100 Waymouth Street, Adelaide, SA 5000, ABN 15 087 651 143 AFSL/Australian Credit Licence 237856. © 2025. |