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What is a comparison rate?

A comparison rate is displayed next to the interest rate being offered by a lender.

It must be included with any advertised home loan interest rate and includes many of the non-interest costs associated with the loan.

A comparison rate, compares loans based on more than just their interest rate. It also considers the total cost of the loan, and calculates an adjusted rate based on other fees, charges and terms associated with the loan product.

Home loan comparison rates are calculated based on a $150,000 loan across a 25-year loan term and take into account the following:

  • interest rate
  • some fees and charges (including upfront costs like establishment fees and valuation fees and ongoing costs such as monthly annual fees)
  • repayment frequently

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