Loan Comparison Tool

Compare loans across 5 key factors: 1) Interest rate - compare rates (variable 6.0-6.8%, fixed 6.2-6.8%), 2) Comparison rate - shows true cost including fees (typically 0.1-0.3% higher than advertised rate), 3) Fees - application ($0-$750), ongoing ($0-$395/year), discharge ($150-$700), 4) Features - offset account, redraw, extra repayments, 5) Loan type - principal & interest vs interest-only, variable vs fixed. Don't just choose lowest rate - a 6.1% loan with $600 annual fee may cost more than 6.2% with $0 fee. Use comparison rate and our calculator above to evaluate total cost over loan term.

Comparison rate is the true annual cost of a loan, including interest rate AND most fees, expressed as a single percentage. It helps compare loans with different fee structures. Example: Loan A - 6.0% interest, $500 annual fee, 6.18% comparison rate. Loan B - 6.2% interest, $0 annual fee, 6.21% comparison rate. Despite Loan A having lower headline rate, Loan B is cheaper (lower comparison rate). Comparison rates are calculated on $150,000 loan over 25 years (standard). Limitations: doesn't include application fee, discharge fee, or LMI; may not reflect your actual loan size/term. Still useful for apples-to-apples comparison. Always check both interest rate AND comparison rate.

Depends on your risk tolerance and market conditions. Variable loans: Rate moves with RBA cash rate. Currently 6.0-6.8%. Benefits: offset account, unlimited extra repayments, lower rates when RBA cuts. Risks: repayments increase if rates rise. Fixed loans: Locked rate for 1-5 years. Currently 6.2-6.8%. Benefits: repayment certainty, protection if rates rise. Limitations: limited extra repayments ($10K-$30K/year), break costs if refinancing early, higher rates in current market. Best strategy (2025): 80% variable + 20% fixed "split loan" - balances certainty with flexibility. Or 100% variable if confident rates will fall 2025-2026. Review RBA forecasts and your risk tolerance.

Fees vary dramatically between lenders. Typical fee structure: Application fee: $0-$750 (many lenders waive this). Annual package fee: $0-$395/year ($0-$11,850 over 30 years). Settlement fee: $0-$300. Valuation fee: $0-$300 (often free for refinancing). Discharge fee: $150-$700 (when you leave lender). Example 1 (Big 4 bank): $600 application + $395/year + $500 discharge = $13,400 over 30 years. Example 2 (Online lender): $0 application + $0 ongoing + $350 discharge = $350 over 30 years. Difference: $13,050. Even 0.1% higher interest rate may cost less than high fees. Refinancing every 3-5 years to avoid "loyalty tax" saves $15,000-$30,000.

Offset accounts are superior for most borrowers. Comparison: Offset account - Savings account linked to loan. Every dollar in offset reduces interest charged. $50,000 in offset = interest calculated on $450,000 (if loan is $500K). Money accessible anytime, no restrictions. No tax on "interest saved" (not actual interest earned). Redraw facility - Extra repayments accessible for withdrawal. Subject to lender restrictions (minimum redraw $2,000, processing delays). May lose access if lender changes policy. Tax implications for investment properties. Choose offset if: you value flexibility, have irregular income, want easy access to savings. Choose redraw if: offset not available, prefer discipline of locked funds. 80% of smart borrowers prefer offset for liquidity + identical interest savings.

Refinance every 2-4 years to avoid "loyalty tax" and access better rates. Current market: existing customers often pay 6.5-7.0%, while new customers get 6.0-6.3% (0.5-0.7% difference). On $500,000 loan, 0.5% difference = $2,500/year savings. Refinancing costs: application/settlement fees $0-$1,000, valuation $0-$300, discharge fee $150-$700 (old lender). Break-even: if saving $2,500/year and costs $1,000, recover costs in 5 months. When to refinance: rate >0.3% above market, lender removed features (offset account), better features available (offset, redraw, rate), every 3-4 years by default to combat loyalty tax. When NOT to: fixed loan with high break costs, small loan balance (<$100K), buying/selling soon (unstable finances).

Principal & Interest (P&I): Standard loan. Each repayment pays both principal (borrowed amount) and interest. Loan balance decreases over time. $500K at 6.5%, 30 years = $3,160/month. Fully repaid after 30 years. Interest-Only (IO): Pay only interest, not principal. Loan balance stays $500K. $500K at 6.5% = $2,708/month. After IO period (1-5 years), reverts to P&I with higher repayments ($3,700/month on remaining 25 years). Who uses IO: Investors (maximize tax deductions, negative gearing), renovators (lower payments during construction), upgraders (holding old property short-term). Downside: no equity built, higher total interest ($900K vs $637K over 30 years). Most owner-occupiers should choose P&I.

Compare your rate to market benchmarks (January 2025): Excellent rates: 5.99-6.15% variable, 6.10-6.25% fixed. Average rates: 6.2-6.4% variable, 6.3-6.5% fixed. Poor rates (loyalty tax): 6.6-7.2% variable, 6.7-7.0% fixed. Factors affecting your rate: loan-to-value ratio (80% LVR = best rates), loan size ($500K+ = better rates), loan type (owner-occupied cheaper than investment by 0.3%), package discounts (0.1-0.2% off with offset + credit card). If your current rate is >6.5% variable, you're paying loyalty tax - refinance! If <6.2%, you have a competitive rate. Check comparison sites monthly and use broker to negotiate - lenders reserve best rates for new customers. Even 0.2% reduction = $1,000/year savings on $500K loan.