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The advertised interest rate is the number lenders shout, but it's rarely the number that decides which loan is cheapest. Two loans with the same headline rate can cost thousands of dollars apart once fees, features and the loan structure are counted. Comparing properly means looking past the rate.
By law, lenders must publish a comparison rate alongside the advertised rate. It folds most fees — application, ongoing and settlement charges — into a single percentage so you can compare like with like. Watch for introductory (honeymoon) rates: a low first-year rate can hide a much higher ongoing rate, and the comparison rate is where that shows up.
An offset account parks your savings against the loan and reduces the interest you pay without locking the money away — often worth more than a small rate difference if you keep a healthy balance. A redraw facility lets you pull back extra repayments. Fixed vs variable is a trade-off: fixed gives certainty but usually blocks extra repayments and charges break costs; variable is flexible but exposed to rate moves. Many borrowers split their loan to get some of both.
Your loan-to-value ratio (LVR) — the loan as a percentage of the property value — drives more than approval. Borrow above 80% LVR and you'll usually pay Lenders Mortgage Insurance, a one-off cost that can run into the thousands and protects the lender, not you. Getting to a 20% deposit avoids it entirely, which often beats chasing a marginally lower rate.
Is the lowest rate always the cheapest loan? No. A slightly higher rate with a genuine offset, no ongoing fees and the flexibility to make extra repayments frequently beats a rock-bottom rate with restrictions.
How much difference does the rate really make? On a $600,000 loan over 30 years, a 0.25% rate difference is roughly $90 a month — about $32,000 over the life of the loan — so small differences compound heavily.
Should I refinance to a lower rate? Possibly, but weigh discharge and application fees, any fixed-rate break costs, and whether resetting the term stretches out your repayments.
This calculator uses current published rates from Australian government and regulator sources. The result is an estimate for general guidance — it does not constitute personal financial advice. For decisions about your circumstances, consult a registered financial adviser, tax agent, or other professional. See editorial standards for how DecisionLab sources and updates its calculator data.