Comparison Rate Explained: What It Includes and Misses

Every home loan ad that shows an interest rate also shows a second, usually higher, number: the comparison rate. It's meant to show the real cost of the loan once fees are counted. It does that reasonably well for the example it's based on, and less well for loans that look different from that example. This guide explains what goes into a comparison rate, what doesn't, and how to use it. It was checked against ASIC, Moneysmart and the National Credit Regulations on 29 October 2026.

HomeLoansCalculator.au is a general information site run by Dominet BV. This page is general information only and is not financial advice. It does not consider your objectives, financial situation or needs. We are not a lender or a mortgage broker and we don't recommend any loan. Check with a licensed professional or the lender before you act. Figures were checked on 29 October 2026. Read our general information notice. The comparison rates on this page are our own calculations for made-up loans, not any lender's rates.

What a comparison rate is

Moneysmart's glossary describes the comparison rate as a rate that helps you work out the true cost of a loan. It includes the interest rate and most fees and charges, reduced to a single percentage.

ASIC explains that Part 10 of the National Credit Code requires credit providers to include a comparison rate when they advertise fixed-term credit for personal, domestic or household purposes. ASIC's own example: a lender advertises an interest rate of 5.49% and its comparison rate might be 5.75%. The gap is the effect of the fees.

How it's calculated

The method is set out in regulation 100 of the National Consumer Credit Protection Regulations 2010. In plain terms, it finds the single yearly rate at which the money you receive equals the present value of everything you pay back, including repayments and credit fees. Government fees, charges and duties are excluded. The result must be correct to at least the nearest 0.01% a year and must be accompanied by the loan amount and term it's based on.

Regulation 97 sets the loan amounts and terms used in ads. The largest is $150,000 over 25 years, and that's the one usually shown next to home loan rates.

What it includes and leaves out

ASIC says the comparison rate only compares cost. It doesn't account for features that might make a loan more useful to you, such as fee-free accounts or flexible repayments.

The warning you'll see

Regulation 99 requires a warning next to an advertised comparison rate. The longer version says the rate applies only to the example or examples given, that different amounts and terms will give different comparison rates, and that costs such as redraw or early repayment fees, and savings such as fee waivers, aren't included but may affect the cost. The short version says much the same in fewer words.

That warning is the most useful thing to understand about comparison rates. The number is exact for the example. It isn't exact for your loan.

Worked examples

All of these are our own calculations for made-up loans with monthly repayments.

Worked example 1, building a comparison rate (example figures). Loan A charges 6.00% a year, a $600 upfront fee and a $10 monthly fee. On the standard $150,000 over 25 years:

• Principal and interest repayment at 6.00%: $966.45 a month
• Plus the $10 monthly fee: $976.45 a month
• You receive $150,000 but pay a $600 fee at the start, so the net amount is $149,400
• The rate at which $976.45 a month for 300 months equals $149,400 is about 6.15%

So Loan A's comparison rate on the standard example is about 6.15%. A loan at 6.15% with no fees would have the same comparison rate.

Worked example 2, a larger loan (example figures). Same Loan A, but you borrow $600,000 over 25 years. The fees are the same dollar amounts, but they're spread over a much bigger loan. The comparison rate drops to about 6.04%.

Worked example 3, when the advertised rate points the wrong way (example figures). Loan B charges 6.10% with no fees. Its comparison rate is 6.10% for any amount.

On $150,000, Loan B is cheaper by $843.03, which matches the advertised comparison rates. On $600,000, Loan A is cheaper by $7,427.90, even though its advertised comparison rate is higher. Most home loans today are well above $150,000, so the advertised figure can favour no-fee loans more than it should for a bigger loan.

Worked example 4, upfront fee only (example figures). A loan at 6.00% with a $1,000 upfront fee and no monthly fee has a comparison rate of about 6.07% on $150,000 over 25 years.

Use a personalised comparison rate instead

Moneysmart's choosing a home loan page says to get the Key Fact Sheet for each loan you're considering, based on the amount you're likely to borrow. The Key Fact Sheet is compulsory and has the same layout for every home loan from every lender. It shows:

• the interest rate
• a personalised comparison rate
• the total amount to be paid back
• the monthly repayment
• establishment fees and ongoing fees

Because it's based on your loan amount, the personalised comparison rate avoids the problem in example 3. Moneysmart also suggests asking about things the fact sheet doesn't cover, such as fee-free extra repayments, offset or redraw, and fees for using loan features.

Limits worth knowing

• It assumes you keep the loan for the full term. If you refinance after a few years, upfront fees count for more than the comparison rate suggests. See refinancing costs.
• Rates that change. For a loan that starts on a fixed or introductory rate and then reverts, check which rates the comparison rate is based on. See fixed vs variable.
• It doesn't value features. An offset account could save far more than a slightly higher fee costs, depending on your balance.
• It doesn't include package discounts or fee waivers. These are listed as exclusions in the regulation 99 warning.

What this means for you

• Use the advertised comparison rate as a first filter, not a final answer.
• Get a Key Fact Sheet for your actual loan amount and compare the personalised comparison rates and total amounts repaid.
• If you plan to borrow much more than $150,000, look closely at upfront fees. They count for less on a big loan.
• Value features separately, especially if you'll keep savings in an offset account.

Try different rates in the repayments calculator, read how repayments are worked out, or go back to the calculators hub.

Frequently asked questions

What's the difference between the interest rate and the comparison rate?

The interest rate is what you're charged on the balance. The comparison rate adds most fees and charges to the interest rate and expresses the total as a single yearly percentage, based on a set example.

Why is the comparison rate based on $150,000 over 25 years?

Regulation 97 of the National Consumer Credit Protection Regulations sets the designated amounts and terms for advertised comparison rates. $150,000 over 25 years is the largest. It hasn't kept pace with typical loan sizes, which is why a personalised comparison rate is more useful.

Does the comparison rate include all fees?

No. ASIC says it leaves out government fees and charges and fees that only apply in certain situations, such as paying off the loan early. The required warning also says redraw fees and fee waivers aren't included.

Is a lower comparison rate always cheaper?

Not always. In our example, a loan with fees had a higher comparison rate on $150,000 but cost $7,427.90 less in total on $600,000. Compare the total amount to be paid back on your Key Fact Sheet.

Where do I find a personalised comparison rate?

On the Key Fact Sheet for the loan, which Moneysmart says you can generally get from the lender, its website or a mortgage broker. Ask for it based on the amount you expect to borrow.