If you’ve been looking around at home loans and mortgages, then you’ve probably come across the term ‘comparison rate’. But for new home buyers, it can be a confusing term that doesn’t quite make sense. When you’re looking to buy your new home, it’s important you know what is a comparison rate and how it affects you.
At No1 Property Guide, we work with all lenders to provide affordable no or low deposit house and land packages to help renters escape the rental nightmare. Darren Walters has more than 20 years’ experience in property, finance, and lending policies. Using this experience, he created his no or low deposit new home system. Which has helped thousands of renters become homeowners, and he could help you as well.
The first step is getting pre-qualified so you understand your factual options. From there, our New Home Consultants will guide you through the journey so you can make an informed decision.
What is the Comparison Rate?
The comparison rate is something lenders will use to give potential home buyers an estimated way to compare costs between the various lenders and home loan products. It will include all or some of the legal fees, charges and interest for the loan and combine it into a single, easy to understand percentage.
It’s a simple solution that allows home buyers to compare different mortgages easily.
Of course, because it is a simplified number, it’s not always going to be 100% accurate. So you should always consult with a financial specialist to ensure you’re getting the factual information about the product.
Are There Any Catches?
One of the biggest caveats to the comparison rate is that it’s often calculated off a smaller loan than a home buyer would usually have. If you check the fine print, they’ll often calculate the comparison rate off something like a $150,000 loan over 25 years. While this might be a simple number to calculate, it’s not really applicable to most home buyers.
When you’re working with No1 Property Guide, we explain all costs and fees from the start. As well as explaining key details and answering questions like ‘what is a comparison rate?’ Darren believes in dealing only in the facts. Which is why we make you aware of everything that goes into our process from the very beginning. When you get pre-qualified and start working towards your new home, our New Home Consultants will be with you every step of the way. Ensuring you understand the entire process.
What Doesn’t the Comparison Rate Include?
Loan comparison rates are a great way to compare different home loan products, but it doesn’t include every fee. There are a couple of non-standard fees and charges that aren’t included when calculating the comparison rate that you may need to consider. Some of the fees and benefits not included are:
- Early repayment fees
- Redraw fees
- Offset accounts
- Fee waivers
Make sure you get details on these and any other fees that aren’t included in the comparison rate. So you can get a true understanding of your mortgage.
Understanding the Comparison Rate Meaning
The idea of the comparison rate is that it is a simple to understand metric that will make comparing loans easier. For the most part, you’ll be fine just looking at the comparison rate of different home loans. For a truly complete understanding of the comparison rate and what it means for you, consult with your lender or our Mortgage Managers here at No1 Property Guide.
How No1 Property Guide Can Help You Become a Homeowner
At the end of the day, the comparison rate is simply a tool to find the best home loan product. But it doesn’t help you meet lending criteria or get approval. But the New Home Consultants at No1 Property Guide can!
Our passion is to help renters become homeowners. And a key part of our process is ensuring you fit lending criteria. Darren’s unique new home system lets us find all your factual options and fit you to lending criteria. This means you are almost guaranteed to get approved for your home loan. In fact, we have had a 95%+ approval rate since we begin operating.
So, whether you are just getting started on your journey, or are sick of waiting and want to get into your new home ASAP. No1 Property Guide is here to help. Your first step is to fill in our pre-qualified form so our New Home Consultants can help find the lending policy that fits you. From there, we simply show you what you can do and let you make an informed decision.