Home Loan Comparison Calculator

Comparing Like With Like

A home loan comparison is fair when both offers start from the same loan amount and run for the same period. This calculator applies one loan amount to both offers and stops both at the end of your comparison period. Set that period from how long the client is likely to keep the loan before selling, refinancing or reviewing it.

Unequal loan terms distort the interest figure. For example, borrow $600,000 at 6.00% with the same fees over 25 years and over 30 years. The 25-year loan repays $268.51 more each month than the 30-year loan. After five years it has charged $2,623.30 less interest, and its balance is $18,733.62 lower.

That interest saving comes from repaying principal faster. The price of the loan is unchanged: both versions have an indicative rate of 6.03%. Enter each offer on the term the client will actually take, and read the balance left to repay beside the interest.

The period can change which offer wins. In the example, Offer B has the lower 5.80% rate but charges $1,595 at settlement. Over five years Offer B costs $3,430.02 less than Offer A. If the client refinances after one year, Offer A costs $274.26 less.

This calculator compares new offers from settlement. To weigh the cost of leaving an existing loan against the savings from switching, use the refinance home loan calculator.

Rates, Fees and Remaining Debt

The calculator reports interest and fees separately because they respond to different inputs. Interest depends on the rate, the balance and how long it is owed. Fees depend on the lender's fee schedule and on how long the loan stays open, since monthly and annual fees repeat.

Over five years in the example, Offer A charges $174,164.33 in interest and $950 in fees. Offer B charges $168,159.31 in interest and $3,525 in fees. Offer B's total of $171,684.31 is $3,430.02 below Offer A's $175,114.33.

The net cost difference counts interest and fees only. Principal repaid is excluded because it reduces the debt the client still owes. Repayments plus fees plus the closing balance, less the loan amount, always equal interest plus fees.

The balance left to repay is what the client still owes when the period ends. At five years, Offer A leaves $558,326.14 and Offer B leaves $556,928.22. Each offer's discharge fee is added in the month its loan is repaid or the period ends.

Using a Comparison Without Live Rates

Enter each offer from the lender's Key Facts Sheet or written offer for the client's actual loan amount. Moneysmart's guide to choosing a home loan lists what that sheet shows, including the interest rate, monthly repayment, establishment fees and ongoing fees.

1. Enter the interest rate and loan term from the offer.
2. Add application, establishment, valuation and settlement fees together as upfront fees.
3. Enter account-keeping fees as monthly fees and package fees as annual fees.
4. Enter the discharge fee from the lender's fee schedule.
5. For a fixed or introductory rate, enter its years and the rate expected to apply after it.

The rate after a fixed period is an assumption. Use the lender's current rate for the loan the fixed rate reverts to, then try a higher rate to see how the gap moves. The same steps compare a fixed offer with a variable offer.

This calculator works only with the numbers you enter. It does not look up lenders or check which rates are on offer today. To see what lenders publish now, search their current product rates before comparing offers. In Track My Trail, Lender Rates shows current home-loan rates from 121 lenders' open banking product data. You can filter them by lender, loan purpose, rate type, repayment type and loan-to-value ratio (LVR).

Those are lenders' published product rates. A client's written offer can differ after pricing or a discount, so enter the offered rate here. The same maths compares car loan and personal loan offers with monthly repayments, using each offer's amount, term and fees.

Comparison Rates and Loan Splits

The indicative comparison rate turns each offer's entered cash flows into one annual percentage. The calculator finds the monthly rate at which the repayments, fees and closing balance are worth the amount advanced, then multiplies it by 12. The amount advanced is the loan amount less fees paid at settlement.

In the example, Offer B's 5.80% interest rate becomes an indicative rate of 5.93%. That figure includes $3,525 of fees on a $600,000 loan with a 30-year term, held for five years. Offer A's 6.00% becomes 6.03% with $950 of fees. The table also shows each offer's effective annual rate, which compounds the monthly rate instead of multiplying it by 12.

A lender's advertised comparison rate is a different figure. Regulation 100 of the National Consumer Credit Protection Regulations 2010 sets its formula over the full term. The advertisement must state the loan amount and term the rate assumes, and those rarely match the client's loan. The guide to what comparison rates include and exclude covers the standard examples and the warning lenders must show.

A split loan divides one loan amount into a fixed split and a variable split held at the same time. Enter the fixed split's amount, and the variable split takes the rest. In the example, $300,000 fixed at 5.50% and $300,000 variable at 6.00% repay $3,502.02 a month together.

The balance-weighted rate multiplies each split's balance by its rate, adds the results and divides by the total loan. For the example, ($300,000 × 5.50% + $300,000 × 6.00%) ÷ $600,000 = 5.75%. The weighted rate includes no fees, so keep it separate from the indicative comparison rate. The guide to splitting a home loan between fixed and variable rates explains how to choose the allocation.