A comparison rate is most simply described as the true cost of your loan. If you've ever found yourself in a position where you're comparing home loans to try and find the right deal, the numbers you are comparing are in fact, comparison rates. While it's easy to get caught up in an attractive interest rate, it's important to know that interest is not the only cost of borrowing.
This figure, displayed as a percentage, comes from a number of different variables. While it is largely based on the interest rate, other factors include:
- The amount you are borrowing
- The time it will take for you to pay it back
- How often you are making repayments
- Fees and charges related to establishing the loan.
All of this is condensed into the comparison rate so that you know exactly what the home loan will cost you.
It's a legal requirement that all lenders display a comparison rate next to the interest rates they advertise. Understanding the comparison rate is akin to reading the fine print. While a sound interest rate can certainly be attractive, it's the comparison rate you need to be looking at if you want to get the full picture.
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Lending criteria apply to all loans, for full terms, conditions, fees and charges, please review our Financial Services Guide, Product Guide and Fees and Charges Guide. These guides are available here and will be provided at the time of acquiring the product or by contacting 13 25 85.
This information has been provided without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness, having regard to your objectives, financial situation and needs. All loans are provided by Beyond Bank Australia Limited, 100 Waymouth Street, Adelaide, SA 5000 ABN 15 087 651 143 AFSL/Australian Credit Licence 237856. © 2023.
