What Is a Comparison Rate?

A successful mortgage broker will be equipped with the necessary information and knowledge to accurately educate their existing and potential clients on what a comparison rate is and why it is important. 

Comparison rates are calculations that indicate a home loan’s cost. A comparison rate calculation will produce a result as a percentage that indicates the true, complete cost of a home loan. Mortgage experts calculate their client’s comparison rates by adding the home loan’s fees, charges, and interest rates, and then convert the result they have calculated into a percentage.

A mortgage broker should calculate their client’s comparison rates to allow them to gain a better understanding of the home loan’s cost when compared to its interest rates. A client who obtains a comparison prior to applying for a home loan will have the opportunity to make sure that the loan’s terms and interest rates are compatible with their financial needs. 

Comparison rates are extremely important to mortgage brokers existing and potential borrowing clients because it allows the client to discover a home loan’s total cost while also comparing the loans rates, fees, and terms with the various types of home loans being offered by the large majority of Australian mortgage brokers and lending specialists. 

Comparing a home loan’s rates, terms, and fees with various other types of home loans and lenders allows a potential borrower to verify they decide on applying for a certain lender’s home loan offering that fits best with the individual’s financial history, status, and credit score.