Comparison Rate Calculator
Calculate the true annual cost of a loan including fees, using the legally mandated NCCP Act Schedule 6 method.
How Comparison Rates Work in Australia
How it works
A comparison rate is a single percentage that reflects the true annual cost of a home loan by combining the advertised interest rate with most standard fees and charges. In Australia, lenders are legally required to display a comparison rate alongside the advertised rate under Schedule 6 of the National Consumer Credit Protection (NCCP) Act 2009. This prevents lenders from advertising a low headline rate while burying costs in fees.
The comparison rate is calculated using a standard formula set by legislation. It assumes a secured loan of $150,000 over a 25-year term with monthly repayments. The calculation rolls in known fees — including establishment fees, ongoing monthly or annual fees, and discharge fees — and converts them into an equivalent annual rate. Because the formula uses a fixed loan size and term, the comparison rate is designed to enable apples-to-apples comparison between products.
However, the comparison rate has limitations. It doesn't account for offset accounts, redraw facilities, fee waivers negotiated at application, or the value of features like extra repayment flexibility. And because it's calculated on a $150,000 loan, the impact of fixed-dollar fees is overstated relative to larger loans. A $395 annual fee adds 0.26% to the comparison rate on a $150,000 loan, but only 0.07% on a $600,000 loan. That's why this calculator lets you see the comparison rate at your actual loan amount.
When to use this calculator
- You're comparing two or more home loan products and want to understand the true cost beyond the headline rate
- A lender has quoted you a low advertised rate but the loan has establishment fees, annual fees, or monthly fees you want to factor in
- You want to see the comparison rate at your actual loan amount rather than the standard $150,000 benchmark
- You're evaluating whether paying a higher annual package fee (e.g. $395/year) is worth the rate discount it provides
- You want to understand the difference between a basic variable product (low rate, no fee, no offset) and a package product (slightly higher rate or annual fee, but with offset and features)
Key concepts
- NCCP Act Schedule 6
- The section of the National Consumer Credit Protection Act 2009 that mandates how comparison rates are calculated and displayed. It requires a standardised $150,000 loan over 25 years to ensure consistency. All Australian lenders advertising a rate must show the corresponding comparison rate.
- Advertised rate vs comparison rate
- The advertised (or headline) rate is the base interest rate charged on the loan balance. The comparison rate adds the cost of known fees on top of this rate. A product with a 5.99% advertised rate and a $395 annual fee might have a comparison rate of 6.25%, while a basic product at 6.15% with no fees might have a comparison rate of 6.17%.
- Fees included in the comparison rate
- Establishment/application fees, ongoing monthly or annual fees, discharge/termination fees, and mortgage documentation fees. Fees NOT included: government charges (stamp duty, registration), lenders mortgage insurance (LMI), offset account fees charged separately, and optional features.
- Effective rate at your loan size
- Because the comparison rate uses a fixed $150,000 loan, fixed-dollar fees (like a $395 annual package fee) have a disproportionate impact. On a $600,000 loan, that fee's impact is roughly one-quarter of what the standard comparison rate suggests. Calculating the comparison rate at your actual loan size gives a more accurate picture.
Worked example — comparing two loan products at $500,000
Emma is choosing between two loans for a $500,000 mortgage over 30 years:
Product A — Basic Variable: 6.15% advertised rate, $0 annual fee, $300 establishment fee, $350 discharge fee, no offset account.
Product B — Package Variable: 5.89% advertised rate, $395 annual fee, $0 establishment fee, $350 discharge fee, 100% offset account.
| Product A (Basic) | Product B (Package) | |
|---|---|---|
| Advertised rate | 6.15% | 5.89% |
| Standard comparison rate ($150k) | 6.17% | 6.22% |
| Comparison rate at $500k | 6.16% | 5.97% |
| Monthly repayment | $3,044 | $2,964 |
| Total interest (30 years) | $595,856 | $567,016 |
| Total fees (30 years) | $650 | $12,200 |
| Total cost | $596,506 | $579,216 |
At the standard $150,000 comparison rate, Product B looks more expensive (6.22% vs 6.17%). But at Emma's actual loan size of $500,000, the $395 annual fee is spread across a much larger balance — making Product B cheaper overall by $17,290 across the loan life. The offset account provides additional unquantified value if Emma maintains a balance in it.