What is the difference between the interest rate and the comparison rate?

The advertised interest rate is the headline price of the money. The comparison rate folds in most fees over a standardised $150,000 loan over 25 years, which is why a cheap-looking rate can print a higher comparison rate once establishment and ongoing fees are counted.

What is a good home loan interest rate in Australia right now?

There is no universal 'good' rate. In late 2026, competitive owner-occupier principal-and-interest variable rates often sit in the high-5s to mid-6s, but the figure that matters is the comparison rate at your LVR, plus whether you will use an offset. Check current tables; this desk does not publish live rates.

Should I compare loans before or after getting pre-approval?

Compare structures first so you know which features are worth paying for, then seek pre-approval on a product you would actually take. Pre-approval on a package you intend to abandon still leaves a credit enquiry on your file.

How to compare home loans in Australia

A working method for comparing Australian home loans that looks past the advertised rate: comparison rates, fees, LVR pricing, features you will actually use, and the serviceability test that decides whether the loan exists.

By Claire Nguyen, Housing editor · 12 March 2026 · Updated 8 October 2026 · 5 min read

Australian home-loan advertising is a sport of small numbers. A lender will print 5.99 per cent in a typeface large enough to see from the tram, then hide the comparison rate, the LVR band, and the $395 annual package fee in a footnote that looks like it was typeset for ants. Comparing loans properly is slower than that, and more useful.

This is not a league table. Rates move. What follows is a method you can reuse when the Reserve Bank has shifted, when a lender reprices a cohort, or when a broker drops three options in your inbox and asks which one 'feels right'. Feeling is not a credit policy.

Start with the loan you actually need, not the one in the ad

Before you open a comparison site, write down five facts: owner-occupier or investor; principal-and-interest or interest-only; the purchase price or refinance balance; the deposit or equity; and whether you need the money in one drawdown or in stages (a construction home loan is a different product). A loan priced for an 80 per cent LVR owner-occupier is not a quote for a 90 per cent investor facility.

If you are a first home buyer, the deposit question is doing extra work: it decides LMI, eligibility for the 5 per cent deposit scheme, and often the rate itself. If you already have a loan, you are comparing a refinance, which means discharge fees and possibly break costs — see when to refinance your home loan.

Read the comparison rate as a warning light, not a score

Australian credit law requires lenders to advertise a comparison rate next to most headline rates. The comparison rate is calculated on a standardised $150,000 loan over 25 years and includes many, but not all, fees. It is a torch, not a photograph. Your loan may be $620,000. Your fees may include a package fee the standard formula treats differently. Some costs — such as lenders mortgage insurance — sit outside the comparison rate entirely.

Use it this way: if two loans have similar advertised rates and the comparison rate on one is 40 basis points higher, something expensive is hiding. Find it. If the comparison rates are close, move on to features and LVR pricing rather than celebrating a 0.02 per cent 'win'.

Price bands follow LVR, not vibes

Most Australian lenders do not have one rate. They have a grid. Borrow 60 per cent of the property's value and you are in a cheap band. Borrow 90 per cent and the same product name may cost more, before LMI. Ask for the rate at your LVR, on your repayment type, for your occupancy. A screenshot of someone else's 70 per cent owner-occupier deal is not a quote.

Valuation risk belongs in this conversation. The lender's valuer may come in under the contract price, which lifts LVR after you have already spent the deposit. Build a buffer. For apartments, some lenders apply tighter inner-city or high-density overlays that change the available LVR even when the building looks ordinary from the street.

Fees are not rounding errors on a 30-year contract

List them on one page: application or establishment, valuation, settlement, annual or monthly package, offset fees, redraw fees, discharge, and — if you might fix — break-cost language. A $0 establishment fee with a $395 annual package can be the right trade if you will use a 100 per cent offset. It is the wrong trade if you wanted a no-frills loan and will never offset a dollar.

Over 30 years, a $10 monthly fee is not 'only ten dollars'. It is a persistent drag, and unlike interest it does not shrink as you repay principal. If you are comparing a basic variable against a packaged loan, do the arithmetic at five years as well as at thirty. Many households refinance or sell well before the original term.

Features: only pay for the ones you will operate

The Australian market sells three features as if they were personality traits: offset, redraw, and extra repayments. They are plumbing.

An offset account reduces interest by the balance you park in a linked transaction account. It is valuable if your pay actually lands there. It is theatre if the account will sit at $400. Redraw lets you pull back extra repayments; handy, but it is not the same as offset for tax or discipline. Extra repayments on a variable loan are usually free; on a fixed loan they are often capped, which is one reason variable versus fixed is a cashflow decision as much as a rate decision.

Split loans let you fix a portion and leave the rest variable. They are useful when you want a floor under a slice of the repayment, not when you are trying to split your way out of indecision.

Serviceability is the comparison nobody puts in the advertisement

A loan you cannot be approved for is not cheaper. Lenders apply the APRA serviceability buffer, haircut some income types, and include HECS-HELP, rent, and existing credit limits. The household that 'wins' a 0.10 per cent sharper rate and fails the assessment has compared the wrong object.

If two lenders quote similar rates and only one will count your overtime, the second-best rate at the first lender is the real comparison. Borrowing power is part of product choice, not a separate later stage.

Worked comparison, in dollars

Suppose two owner-occupier, principal-and-interest loans for $580,000 at 80 per cent LVR. Loan A advertises 5.94 per cent with a 6.01 per cent comparison rate, no annual fee, and a redraw facility. Loan B advertises 5.89 per cent with a 6.18 per cent comparison rate, a $395 package, and a 100 per cent offset. If you will keep $40,000 of transaction funds in the offset, Loan B can be cheaper in interest even though its comparison rate looks worse — because the standard comparison formula does not know about your $40,000. If you will not offset, Loan A is probably cleaner.

That is the whole method in miniature: identify the structure, read the comparison rate as a clue, price the LVR band, add fees, keep only the features you will use, then ask whether the lender will actually lend.

A short checklist you can reuse

Same occupancy, repayment type and LVR on every quote.
Comparison rate and the fee list, not one or the other.
Offset, redraw and extra-repayment rules in writing.
LMI quoted separately if LVR is above the lender's LMI-free threshold.
Serviceability outcome, including how overtime, bonuses and HECS are treated.
Exit costs if you might refinance or sell inside the fixed period.

For policy context, ASIC's MoneySmart home-loan pages remain the public-interest baseline. This desk will not pick a lender for you. It will insist you compare the contract, not the billboard.