Mortgage Comparison


Looking to apply for a mortgage or thinking of refinancing? It is important to compare a number of lenders to make sure you get the best deal on your new mortgage.

Look at their mortgage interest rates, ongoing and upfront fees, and loan features. Before you go looking, you should know and understand the types of loans and features available. This lets you work out exactly what you need and also lets you better compare mortgages.


Comparing Mortgages

  • Key fact sheet: Naturally, when you start comparing different lenders you will tend to look at their interest rate because this is the biggest influence on the cost of borrowing money from them. The best way to compare is by asking for a key fact sheet from each lender. A key fact sheet is a document that contains a summary of the loan you are considering including the estimated cost, the fees involved, repayments, and more.
  • Mortgage comparison rate: As the name suggests, a comparison rate is another helpful tool for comparing mortgages. When you visit loan comparison sites, you will often see two types of rates. One is the advertised rate or the current rate, and the other one is the comparison rate. For example, you may have seen a loan product advertised as 3.54% variable rate*, and 3.56% comparison rate*. While the comparison rate shows a more realistic cost of the loan that includes the interest rates, fees and charges, take note that this is calculated on a loan of $150,000 for over 25 years. Meaning, if you're loan size is over that amount and if your loan term is over 25 years, there will be a slightly different percentage.
  • Mortgage calculator: This is another helpful tool when you are comparing mortgages. You can play around with the calculator by putting in your loan amount, term, interest rate, repayment frequency, and repayment type. This way you can quickly see what your repayments and the total amount of your loan will be if you decide to go with a particular lender. The mortgage calculator even has the ability to compare two loans so you can easily see which lender offers the most competitive deal.

Features and types of mortgage

Understanding the different features and types of home loans is useful when comparing mortgages. Here are some things to take note of:

Types of mortgages

  • Variable rate: With a variable rate, the interest rate on your mortgage can increase and decrease. This type of rate offers more flexibility.
  • Fixed rate: A fixed rate is a type of mortgage where your interest rate will not change for an agreed period of time. The term of a fixed rate is usually 1-5 years, after which your rate will revert to variable. This is a great option if you need to know exactly how much you will pay every month. However, features are limited.
  • Split loan: This type of mortgage offers some of the benefits of both a variable rate and a fixed rate. You can split your loan at a ratio of your choice, for instance, 50/50 or 20/80.

Features of mortgages

  • Extra repayments: This feature is only allowable when you’re on a variable rate loan. This lets you make extra repayments towards your mortgage so you can pay off your loan faster, and save on interest.
  • Offset redraw facility: This lets you offset money against your home loan. Whatever amount you have in your offset redraw facility will be offset against the loan balance you have. This saves you money in interest, and lets you redraw the money at no charge when you need it.
  • Interest-only: This a loan feature where your repayments will only cover your interest during the interest-only term. While this lets you save money during that period, keep in mind that your repayments will increase once it goes back to principal & interest repayments.  

Associated fees

The fees attached to your loan will also play a huge role when comparing mortgages. Fees can include upfront fees, ongoing fees, and discharge fees. You can ask your lender, or look at the key fact sheet to know how much you need to pay in fees.

The bottom line

It is worth taking the time to understand your mortgage. This lets you compare mortgages from different lenders more easily and get the right loan.


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