Loan Comparison Calculator
Is the lower rate actually the cheaper loan?
Two loans with different rates, fees, and features can look very similar at first glance but end up costing very different amounts over time. Use this calculator to compare them properly.
How does it work?
A loan comparison calculator lets you enter the details of two loans side by side, including interest rates, fees, loan terms, and features. It calculates the total cost of each loan over the full term including all fees, giving you a true comparison rather than just a rate comparison. This is important because a loan with a slightly higher rate but no fees can sometimes be cheaper overall than a loan with a low rate and high fees.
The calculator has been provided in good faith as a guidance tool only. Results are not financial advice, are a guide only, and are not a guaranteed outcome or quote. Borrowers should always discuss their individual situation with an Australian Credit Licensee or authorised Credit Representative.
What to include when comparing two loans?
The interest rate
The headline rate is the starting point but not the full story. A small difference in rate compounds significantly over 25 to 30 years.
Fees
Application fees, annual fees, offset account fees, discharge fees, and redraw fees all add to the true cost of a loan. A loan with a higher rate but no fees can be cheaper than one with a lower rate and high ongoing fees.
The comparison rate
Australian law requires lenders to display a comparison rate alongside their headline rate. The comparison rate factors in most fees and gives a better single figure for comparing loans. However, it does not include all fees (like break costs or redraw fees) and is based on a standard loan amount and term that may not match yours.
Features
An offset account, redraw facility, flexible repayments, and portability (the ability to take the loan with you if you move) all have value that is hard to put a number on but matters in practice.
How to use this calculator well
• Enter all fees for both loans, not just the rate. Annual fees in particular add up significantly over 25 to 30 years.
• Compare loans with the same loan amount and term to get a meaningful result.
• Think about the features you will actually use. An offset account is only valuable if you will keep savings in it.
• Run the comparison over your realistic holding period, not just the full 30 years, especially if you are likely to refinance or sell in 5 to 10 years.
Loan comparison questions we get asked a lot
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Not always. A loan with a slightly higher rate but no fees, a genuine 100% offset account, and flexible repayments can be a better overall product than one with a lower rate and restrictive conditions. Total cost over the term of the loan is the better measure.
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The interest rate is what you pay on your loan balance. The comparison rate includes the interest rate plus most fees and charges, expressed as a single annual percentage. The comparison rate is a better tool for comparing the true cost of different loans, though it is not perfect because it does not include all fees and is based on standard assumptions that may not match your loan.
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An offset account is worth having if you typically keep meaningful savings that you could park there. If your savings are minimal, the offset may not justify any additional fee. Use our Home Loan Offset Calculator to estimate the saving for your typical balance.
Want us to compare loans for you across lenders?
That is exactly what we do. Book a discovery call and we will then do the comparison work for you.