Comparison Rate: What You Need to Know

A mortgage is a culmination of several components. The main element is the principal. In Australia, the average mortgage amount borrowed has reached almost $600,000. Then, the interest rate follows. The average home loan interest rate hovers at 2.68%. In addition, homebuyers pay a series of fees upfront and during the closing stage.

Mortgage fees include:

• Application fee
• Valuation fee
• Title fee
• Annual fees

Some lending professionals estimate that homebuyers pay 6% of the amount that they borrow in fees. Another way to calculate the total amount paid is to look at the comparison rate. 

Mortgage House makes it easy to find the comparison on our home loan products. For example, if you have interest in our Affordable First Home Buyer Special, you’ll see the interest rate and comparison rate. An applicant might qualify for the 2.29% interest rate. If so, the comparison rate becomes 2.33%.

The difference between the rates is $10 a month. Over 30 years for a $500,00 mortgage, the fees increase the home loan by $36,000. Understanding the elements of a mortgage, homeowners can find ways to save on the costs. 

To get a better idea of how all the elements of a home loan impact the total amount you’ll pay, try our Mortgage House mortgage calculator.

Comparison Rate Conclusion

To understand the true cost of any mortgage, take a look at the comparison rate. The rate incorporates fees. Therefore, homebuyers receive a better idea of the amount they will pay over the life of the home loan. Contact our Mortgage House loan specialists to obtain more guidance today.