The headline interest rate is just the start. Here is what to look at when comparing home loans — and why a broker compares more than just rate.
When comparing home loans, most people look at the interest rate. But rate is just one of several factors that determine the true cost — and suitability — of a loan.
The Comparison Rate: A Better Starting Point
The comparison rate combines the interest rate with most fees to give a truer annual cost. It is calculated on a $150,000 loan over 25 years (a standardised basis for comparison). Loans with high establishment or ongoing fees can look cheaper on the headline rate but more expensive on the comparison rate.
Use comparison rate as a filter — but note it does not include all fees (redraw fees, discharge fees, and break costs are not included).
Offset Account vs Redraw: Cash Flow Impact
An offset account is a transaction account linked to your loan. Every dollar in the offset reduces the balance on which interest is charged — dollar for dollar, every day. A 100% offset on a $600,000 loan with $50,000 in the offset account means you are only paying interest on $550,000.
Redraw allows you to access extra repayments you have made but is not as flexible — some lenders restrict redraw frequency or amounts, and redrawn funds may be re-categorised for tax purposes on investment loans.
If you are an owner-occupier with savings to keep nearby, a loan with a 100% offset account is typically the better choice over redraw.
Fixed vs Variable: Flexibility vs Certainty
Fixed rates give you repayment certainty for the fixed term but limit extra repayments and remove offset account benefits on most products. Variable rates offer full flexibility — extra repayments, offset, and redraw — but repayments move with the market.
Split loans (part fixed, part variable) offer a middle path. See our fixed vs variable guide for a full breakdown.
Loan Portability
Some lenders allow you to take your existing loan with you when you sell and buy a new property, avoiding refinancing costs. Useful if you are likely to move in the medium term.
Lender Policy Beyond Rate
Rate is set by the market. Policy is set by the lender. Policies that matter:
- Maximum LVR for your property type and postcode
- How self-employed income is assessed
- Rental income shading
- Which debt types are counted
- Construction draw conditions
A broker compares policy across 40+ lenders — not just rate — to find the loan that fits your specific situation. Contact Sam for a free home loan comparison.
Frequently Asked Questions
Is the lowest interest rate always the best home loan?
Not necessarily. A lower rate with high ongoing fees, no offset, or inflexible features can cost more over the life of the loan than a slightly higher rate with better structure.
How do I know if my existing loan is still competitive?
A broker can run a free comparison against current market rates and products. If the gap is meaningful, the cost of refinancing is typically recovered within 12–24 months in savings.
Last reviewed 27 July 2026 by Sam Elvitigala, MFAA Accredited Mortgage Broker. General information only — not personal financial or credit advice.