Calculate an estimated fee-inclusive rate for a loan, factoring in compulsory fees and charges. Australian credit providers generally must include a comparison rate when advertising relevant fixed-term consumer credit covered by the National Credit Code.
📖 12 min read · ⏱️ Calculator time: ~30 seconds
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Results are estimates only. This is not necessarily the lender's legally advertised comparison rate — see "Standard advertised scenario" below and always confirm with the lender's official disclosure documents.
The figure lenders are legally required to advertise uses a standardised $150,000 loan over 25 years, regardless of your actual loan size — shown here using your rate and fees for reference.
The comparison rate combines the interest rate AND most fees and charges into a single percentage, making it easier to compare loans. Australian credit providers generally must include a comparison rate when advertising relevant fixed-term consumer credit covered by the National Credit Code.
Warning: The comparison rate is standardised on a $150,000 loan over 25 years. For your actual loan, the impact of fees will differ.
A comparison rate is a single percentage figure that combines a loan's interest rate with most fees and charges, giving a more accurate picture of the true annual cost than the headline interest rate alone. Two loans with identical interest rates but different fee structures will show different comparison rates — and, as the calculator above demonstrates, a loan with a lower advertised rate can end up costing more overall once its fees are factored in.
Australian credit providers generally must include a comparison rate under the National Consumer Credit Protection Act 2009 and National Credit Code when advertising relevant fixed-term consumer credit. The comparison rate must be calculated on a standardised basis — a $150,000 loan over 25 years — which allows direct comparison between products.
The interest rate is what your repayments are actually calculated on — it's the number that determines your monthly repayment amount. The comparison rate is a standardised, fees-inclusive figure used purely for comparing products side by side; it isn't the rate your repayments are based on. This is why the calculator above shows both: your actual monthly repayment uses the advertised rate, while the comparison rate tells you how the total cost of this loan stacks up against another.
The comparison rate is the discount rate at which the net amount you actually receive (the loan amount minus any upfront fee) equals the present value of all future repayments — including ongoing fees — plus the present value of any exit fee paid at the end. In formula terms:
There's no algebraic shortcut to solve this directly — lenders (and the calculator above) use an iterative numerical method to find the rate that balances the equation. This is also why an upfront fee has a bigger effect on the comparison rate for a shorter loan: the same dollar fee is being "spread" over fewer years of repayments, so it needs a larger rate adjustment to balance the equation.
Without a standardised comparison rate, lenders could advertise a low headline rate while recovering the difference through fees — making genuine comparison very difficult for borrowers. The comparison rate closes this loophole for the fees it captures, which is why regulators mandate its disclosure. It's most useful as a first screen when shortlisting loans; the Loan A vs Loan B panel above lets you test this directly with your own numbers.
Relevant fixed and variable credit products may be subject to comparison-rate disclosure requirements, but the assumptions used can differ by product — the figure is inherently more useful for variable loans, whose rate (and therefore repayment) is assumed constant for the standardised calculation. Fixed-rate product comparison rates may depend on the assumptions required for the product, including what happens after the fixed period — some blend the fixed-period rate with an assumed reversion rate. Check the lender's disclosure documents for the specific assumptions used.
Because the comparison rate excludes government charges, optional-service fees, and event-dependent charges (see the fee table below), several real costs can still catch borrowers off guard: stamp duty and mortgage registration on purchase, LMI if your deposit is small, redraw fees on some loans, and break costs on fixed loans exited early. None of these show up in the headline comparison rate, so budget for them separately using our Stamp Duty and Mortgage calculators.
| Loan | Advertised Rate | Comparison Rate | Difference | What the Gap Means |
|---|---|---|---|---|
| Basic variable loan (no fees) | 6.30% | 6.30% | +0.00% | No fees — the two rates are identical |
| Package loan (annual fee $395) | 6.20% | 6.31% | +0.11% | Annual fee adds a modest ongoing cost |
| Fixed rate loan (establishment fee $600) | 5.99% | 6.00% | +0.01% | A one-off fee has a small impact on a 25-year loan |
| Personal loan with fees (short term) | 9.99% | 11.49% | +1.50% | Fees matter far more on smaller, shorter loans |
Figures calculated using this page's own calculator (25-year home loans at $500,000; personal loan example at $25,000 over 5 years) — try your own numbers above.
This means the comparison rate still has limitations. A loan with very low fees during the standard repayment period but high break costs for early exit could look cheaper on comparison rate but be more expensive if you sell or refinance within 5 years.
| Fee | What it is | Included in comparison rate? |
|---|---|---|
| Application/establishment fee | One-off fee to set up the loan | Yes |
| Annual/monthly package fee | Ongoing fee for the loan or a bundled package | Yes |
| Discharge/exit fee | Fee to close out the loan | Yes |
| Valuation fee | Cost of valuing the property | Often, if compulsory |
| Government registration/stamp duty | State government charges | No |
| Redraw/offset account fee | Fee for using an optional feature | No |
| Early repayment/break fee | Fee for exiting a fixed loan early | No |
| LMI | Lenders Mortgage Insurance, if LVR >80% | No |
The National Consumer Credit Protection Act 2009 (and its associated Regulations) generally requires credit providers to disclose a comparison rate when advertising relevant fixed-term consumer credit covered by the National Credit Code, calculated using a standardised methodology and loan amount so that consumers can compare products on a like-for-like basis. ASIC enforces this requirement and provides consumer guidance through MoneySmart. The standardisation ($150,000 over 25 years for home loans) means the comparison rate shown by a lender may not exactly match what you'd get on your own loan amount and term — which is exactly why a calculator like this one, that lets you plug in your actual figures, is more useful for your specific situation.
Suppose Lender A advertises 6.00% with a $600 upfront fee, $395 annual fee and $350 exit fee on a $150,000, 25-year loan — this produces a comparison rate of approximately 6.40%. Lender B advertises a higher headline rate of 6.30% but charges no fees at all — its comparison rate is exactly 6.30%, since there's nothing to add. Despite Lender A's lower advertised rate, the Loan A vs Loan B panel in the calculator above shows Lender B is actually the cheaper loan overall by several thousand dollars across the loan's life — a result that would be completely invisible if you only compared the two headline rates.
| Term | Meaning |
|---|---|
| Comparison rate | A standardised rate combining interest and most fees, for comparing loans. |
| Advertised/headline rate | The interest rate your repayments are actually calculated on. |
| NCCP Act | National Consumer Credit Protection Act 2009 — mandates comparison rate disclosure. |
| Establishment fee | A one-off fee charged to set up a new loan. |
| Discharge fee | A fee charged to close out a loan. |
| APR | Annual Percentage Rate — the US/international equivalent concept to Australia's comparison rate. |
| LMI | Lenders Mortgage Insurance — not included in the comparison rate. |
The comparison rate exists precisely so a low headline rate can't hide a high-fee loan — but it's a starting point, not the final word. Use the calculator above to compute the comparison rate for your actual loan amount and term (not the standardised $150,000/25-year figure lenders publish), compare two real offers side by side, and remember to separately budget for the costs the comparison rate deliberately excludes, like stamp duty and optional feature fees.
The American "APR" (Annual Percentage Rate) and Australia's "comparison rate" serve the same purpose — revealing the true annual cost — but are calculated differently. The Australian comparison rate uses a standardised $150,000 loan over 25 years as the basis for all products, enabling direct comparison. The US APR uses the actual loan terms. This is why a direct comparison rate figure from an Australian lender should not be compared directly with an APR from an overseas product.
What is a comparison rate in Australia?
A comparison rate (the Australian equivalent of APR) is a single percentage that combines the loan's interest rate with most fees and charges. It is calculated on a standardised $150,000 loan over 25 years. Australian credit providers generally must include a comparison rate when advertising relevant fixed-term consumer credit covered by the National Credit Code. Always compare comparison rates, not headline rates.
Why is the comparison rate higher than the interest rate?
The comparison rate includes fees in addition to interest. A $395 annual package fee on a $500,000 loan adds approximately 0.11% to the effective rate over 25 years. Large upfront fees have a larger impact on shorter loans — the same fee represents a much higher effective rate on a 5-year loan than a 25-year one.
Is a lower comparison rate always better?
Generally yes — a lower comparison rate means lower total cost under the standard comparison basis. However, the comparison rate excludes some fees (offset account fees, early exit fees, government charges) and is based on a $150,000 loan over 25 years which may not match your actual loan. For large loans, the comparison rate is a useful screen; always read the full fee schedule for your specific loan amount.
What is APR in Australia?
Australia does not use the term APR (Annual Percentage Rate) in consumer lending — the equivalent is the comparison rate. The National Consumer Credit Protection Act mandates comparison rate disclosure. For credit cards, Australian lenders must display the annual purchase rate (the nominal interest rate), while credit card comparison sites often calculate an equivalent APR including fees.
How is the comparison rate calculated?
It's the discount rate at which the loan amount (minus any upfront fee) equals the present value of all future repayments plus ongoing fees, plus the present value of any exit fee. There's no simple algebraic formula — lenders use an iterative numerical method to solve for the rate, which is exactly what the calculator above does.
Why do comparison rates matter when choosing a home loan?
Without them, a lender could advertise an attractively low headline rate while recovering the difference through fees, making genuine comparison difficult. The comparison rate closes this gap for the fees it covers, making it a useful first screen when shortlisting loans.
Does the comparison rate apply the same way to fixed and variable loans?
Both generally display one, but a fixed loan's comparison rate depends on the assumptions required for that product, including what happens after the fixed period ends — some lenders blend the fixed-period rate with an assumed reversion rate. Check the lender's disclosure documents for the specific method used.
What hidden costs does the comparison rate not capture?
Government charges like stamp duty and mortgage registration, fees for optional features like redraw or offset accounts, LMI, and break costs on fixed loans exited early. Budget for these separately using dedicated calculators.
What loan fees are typically included in the comparison rate?
Application/establishment fees, ongoing monthly or annual fees, and discharge/exit fees are generally included, since they're certain to be charged as part of the standard loan.
What loan fees are typically excluded from the comparison rate?
Government charges (stamp duty, registration), fees for optional services (redraw, offset accounts), and fees that depend on events that may not occur (early repayment/break fees) are excluded.
What law requires Australian lenders to show a comparison rate?
The National Consumer Credit Protection Act 2009 (and its Regulations) requires lenders offering consumer credit to disclose a comparison rate alongside any advertised interest rate, using a standardised calculation method and loan amount.
Can I use this calculator for a personal loan or car loan, not just a mortgage?
The calculator can provide a general fee-inclusive estimate for other amortising loans, but it should not be treated as the lender's legally prescribed comparison rate unless the correct regulatory assumptions for that specific product are used. Fees typically have a much larger proportional impact on smaller, shorter-term loans like personal loans.
Should I always choose the loan with the lowest comparison rate?
It's a strong starting signal, but not the whole picture — check that the loan also has the features you need (offset account, redraw, extra repayments) and that no significant excluded costs (like a large potential break fee) apply to your situation.
Why does the standardised $150,000/25-year comparison rate not match what I'd get?
Because fees have a different proportional impact depending on loan size and term — a $600 fee matters more on a $150,000 loan than a $750,000 one, and more on a 5-year term than a 25-year one. Use the calculator above with your own loan amount and term for a more relevant figure.
Does a bigger loan mean a smaller gap between the interest rate and comparison rate?
Generally yes, since fixed-dollar fees make up a smaller proportion of a larger loan. A $600 establishment fee has a much smaller effect on a $750,000 loan's comparison rate than on a $150,000 loan's.
Does a shorter loan term increase the gap between the rates?
Yes — the same dollar fees are spread over fewer years of repayments on a shorter loan, requiring a larger rate adjustment to balance the comparison rate equation. This is why personal loans (short terms) often show a much bigger gap than home loans.
Can two loans have the same comparison rate but different features?
Yes — the comparison rate only reflects cost, not features. Two loans could show an identical comparison rate while one offers a 100% offset account and unlimited extra repayments and the other doesn't. Always compare features alongside the rate.
How accurate is this comparison rate calculator?
It uses the standard actuarial methodology (solving for the discount rate that balances the loan amount against the present value of repayments and fees) and has been verified against reference cases including a zero-fee sanity check. For your exact bank-published comparison rate, always confirm with the lender's official disclosure documents.
Can I compare a fixed rate loan against a variable rate loan using this calculator?
Yes — enter each loan's rate and fees in the Loan A and Loan B fields. Just remember a fixed loan's comparison rate assumes a reversion rate after the fixed period, which introduces some uncertainty that a variable loan's figure doesn't have.
Does the comparison rate change if I make extra repayments?
No — the comparison rate is calculated on the standard minimum repayment schedule and doesn't factor in voluntary extra repayments, which reduce your actual interest cost but aren't part of the standardised disclosure calculation.
Is the comparison rate the same as the "true cost" of a loan?
It's a much better guide than the headline rate, but not a complete picture, since it excludes government charges and optional-feature fees. Think of it as a standardised cost comparison tool, not a full budget of every dollar you'll pay.
Why do some lenders show a lower comparison rate than their competitors despite similar advertised rates?
Usually because they charge fewer or lower fees — no application fee, no ongoing package fee, or a lower discharge fee. Comparing the itemised fee schedule alongside the comparison rate shows exactly where the difference comes from.
Do credit cards have a comparison rate?
Not in the same regulated form as home loans and most other credit products. Credit cards must display an annual purchase rate (nominal interest rate) rather than an NCCP-style comparison rate, though some comparison sites calculate an equivalent effective rate including fees.
What is an establishment fee?
A one-off fee some lenders charge to set up a new loan, covering their administrative cost of establishing the facility. It's included in the comparison rate calculation.
What is a discharge fee?
A fee charged by your lender when you close out (discharge) a loan, whether by paying it off, refinancing, or selling the property. It's included in the comparison rate calculation since it's a certain cost of the loan lifecycle.
Are offset account fees included in the comparison rate?
No — fees for optional features like an offset account or redraw facility are excluded from the comparison rate, since not every borrower uses them. Factor these in separately if you plan to use the feature.
Does LMI affect the comparison rate?
No — Lenders Mortgage Insurance is excluded from the comparison rate calculation, since it depends on your specific deposit size (LVR) rather than being a standard cost of the loan itself. Budget for it separately if your deposit is under 20%.
Can the comparison rate be lower than the advertised interest rate?
Where only compulsory positive fees are included, the comparison rate will normally be equal to or higher than the advertised interest rate — it's not expected to fall below it under standard fee structures, though unusual product structures could complicate this.
How much does a $600 establishment fee actually cost me?
In isolation it's a one-off $600 payment, but its effect on the comparison rate depends on your loan size and term — on a large, long-term home loan it barely moves the rate; on a small, short personal loan it can add a full percentage point or more. Use the calculator above with your own figures to see the exact effect.
Should I recalculate the comparison rate for my exact loan amount?
Yes — the lender's published comparison rate uses the standardised $150,000/25-year basis, which may not reflect your actual borrowing. Enter your real loan amount and term into the calculator above for a comparison rate that's actually relevant to your situation.