---
title: "How to compare home loans - Sapience Financial"
description: "How do you compare home loans so you find what's right for you? It's the $64,000 question Here are six keys to start and focus your thinking about home loans."
url: "https://finallysorted.com.au/blog/how-to-compare-home-loans"
date: "2026-06-15T08:59:35+00:00"
language: "en-GB"
---
# How to compare home loans
- š Wealth Builders & Home Finance
- [ mortgage ](https://finallysorted.com.au/all-tags/mortgage)
- [ comparing mortgage intererst rates ](https://finallysorted.com.au/all-tags/comparing-mortgage-intererst-rates)
- [ comparing intererst rates ](https://finallysorted.com.au/all-tags/comparing-intererst-rates)
- [ š Wealth Builders & Home Finance ](https://finallysorted.com.au/insights/wealth-builders-home-finance)
 Comparison rates take the hard work out of comparing the cost of different loans, but they are not the only thing to consider when you are shopping around for a loan. Reading Time: 6 minutes
---
### How do you compare home loans so you find what's right for you?
### That's often the [$64,000 question](https://en.wikipedia.org/wiki/The_%2464,000_Question) we're asked by our clients.
So here are six keys to start your thinking.
#### *Read in this article*
- [Here are six steps to help you start your thinking when comparing home loans.](https://finallysorted.com.au/blog/how-to-compare-home-loans#here-are-six-steps-to-help-you-start-your-thinking-when-comparing-home-loans)
- [1. Beware Low Rate advertising](https://finallysorted.com.au/blog/how-to-compare-home-loans#section-1-beware-low-rate-advertising)
- [2. Understand the Comparison Rate](https://finallysorted.com.au/blog/how-to-compare-home-loans#section-2-understand-the-comparison-rate)
- [3. Get your budget sorted and know what you can afford to repay](https://finallysorted.com.au/blog/how-to-compare-home-loans#section-3-get-your-budget-sorted-and-know-what-you-can-afford-to-repay)
- [4. Get a copy of the funders Key Facts Sheet (and read it)](https://finallysorted.com.au/blog/how-to-compare-home-loans#section-4-get-a-copy-of-the-funders-key-facts-sheet-and-read-it)
- [5. Compare the loans effective interest rate](https://finallysorted.com.au/blog/how-to-compare-home-loans#section-5-compare-the-loans-effective-interest-rate)
- [6. Compare the loan features you need](https://finallysorted.com.au/blog/how-to-compare-home-loans#section-6-compare-the-loan-features-you-need)
- [Remember...](https://finallysorted.com.au/blog/how-to-compare-home-loans#remember)
- [Frequently Asked Questions: Comparing Home Loans](https://finallysorted.com.au/blog/how-to-compare-home-loans#frequently-asked-questions-comparing-home-loans)
- [Why is the 'Comparison Rate' more important than the advertised rate?](https://finallysorted.com.au/blog/how-to-compare-home-loans#why-is-the-comparison-rate-more-important-than-the-advertised-rate)
- [What happens after a 'Honeymoon Rate' expires?](https://finallysorted.com.au/blog/how-to-compare-home-loans#what-happens-after-a-honeymoon-rate-expires)
- [How do I use a 'Key Facts Sheet' to compare loans?](https://finallysorted.com.au/blog/how-to-compare-home-loans#how-do-i-use-a-key-facts-sheet-to-compare-loans)
- [Are loan features like Offset Accounts worth the extra cost?](https://finallysorted.com.au/blog/how-to-compare-home-loans#are-loan-features-like-offset-accounts-worth-the-extra-cost)
Most people think comparing home loans on just the advertised interest rate alone, is the most accurate way to compare different loans from different funders.
But theyād be wrong.
> Thereās little value in having a loan with the cheapest interest rate if it doesnāt also have the features you need and the options you want.
### Here are six steps to help you start your thinking when comparing home loans.
### 1. Beware Low Rate advertising
Many funders advertise incredibly low-interest rates to lure in unsuspecting (or time poor) borrowers who 12 months later, suddenly find the interest rate on their new loan is suddenly higher than they originally planned for.
The classic example is the loan with the **Honeymoon Interest Rate**.
- Most Honeymoon rate loans have incredibly low rates for a 12-month honeymoon period, after which it reverts to a higher interest rate.
- This may mean your interest rate is now well above what other mortgage holders are paying.
- Most of these loans after 12 months simply revert to the individual funder's Standard Variable Rate (SVR) often the highest rate, typically 1 - 2% higher than what they started off.
### 2. Understand the Comparison Rate
Displaying Comparison Rates were made mandatory in an attempt to stop lenders from advertising incredibly low-interest rates to lure unsuspecting borrowers into loans that in reality cost them far more than they expected.
Credit providers who advertise interest rates must also advertise the Comparison Rate.
- Youāll now see the rate displayed alongside the advertised rate with the caption, āComparison Rateā
**A comparison rate is designed to help you work out the true cost of a loan.**- It reduces to a single percentage figure the interest rate plus most fees and ongoing charges relating to a loan
- The comparison rate helps you to compare loans from different lenders to find out how much it will cost you
The table below shows a practical example of how the comparison rate reveals the effective interest rate on an advertised loan.
Can you see the difference?
| | Interest rate | Fees & charges | Comparison rate |
|---|---|---|---|
| Home Loan A | 8% | 0.5% | 8.5% |
| Home loan B | **8.25%** | 0.1% | **8.35%** |
In the example above, home loan B will cost less than home loan A, even though home loan A has a lower interest rate. [
Source: SmartMoney](https://www.moneysmart.gov.au/borrowing-and-credit/home-loans/interest-rates/comparison-rates)
### 3. Get your budget sorted and know what you can afford to repay
As part of an application for a home loan, you should be asked to complete a household budget.
This is to show the funder you have considered the importance of spending less than you earn and show you have the required budget available to service and repay the new debt
### 4. Get a copy of the funders Key Facts Sheet (and read it)
All credit providers are required to provide Key Fact Sheets outlining the key features and costs of the loan.
The key facts sheet will give you the information you need, in a set format so you can directly compare features, interest rates and fees.
### 5. Compare the loans effective interest rate
Now you know what to look for in the [Comparison Rate](#Comparison-rates), you'll be able to better understand the effective interest rate that you're considering.
### 6. Compare the loan features you need
When you're beginning your thinking about shopping around for a loan, youāll also need to compare the features you need and the options you want.
Loan features can include:
- [Offset accounts](https://finallysorted.com.au/blog/understand-how-an-offset-account-works)
- Redraw facilities
- The ability to make principal reductions during a fixed rate term
- Portability of the loan across different securities.
As loan features really need to be mapped to your individual needs, this is a great conversation to have with your financial advisor, like Sapience. (shameless plug I know but weāve been doing this for 20+ years and weāre rather good at what we do).
### Remember...
- When **comparing interest rates**, [Comparison Rates](#Comparison-rates) take the hard work out of comparing the cost of different loans.
- When **comparing features**, read the[ Key Fact Sheet](#key-fact-sheets) of different loans and have a conversation with your financial adviser, like Sapience.
### Frequently Asked Questions: Comparing Home Loans
#### Why is the 'Comparison Rate' more important than the advertised rate?
Many lenders lure borrowers with low advertised rates while hiding high fees in the fine print. The **Comparison Rate** is a legally mandated figure that combines the interest rate and most ongoing fees into a single percentage. This allows you to see the "true cost" of the loan and compare different lenders on an even playing field.
#### What happens after a 'Honeymoon Rate' expires?
When a honeymoon period (usually 12 months) ends, the loan typically reverts to the lender's **Standard Variable Rate (SVR)**. This rate is often significantly higher than the introductory rateāsometimes by 1-2%āmeaning your repayments could jump unexpectedly if you haven't planned for the revert rate.
#### How do I use a 'Key Facts Sheet' to compare loans?
Lenders must provide a **Key Facts Sheet** upon request. Because these sheets use a standardized format across the industry, you can place them side-by-side to compare the total amount you will pay over the life of the loan, the effective interest rate, and the specific fee structure of each product without the marketing jargon.
#### Are loan features like Offset Accounts worth the extra cost?
It depends on your lifestyle. An **Offset Account** can save you thousands in interest by "offsetting" your savings against your loan balance. However, these loans often come with higher annual fees or slightly higher rates. A strategic review with a financial adviser can determine if the interest savings outweigh the additional costs for your specific situation.
*Disclaimer: Home loan products and comparison rates are subject to change and lender approval. For a personalized mortgage audit, we recommend a [confidential consultation](https://finallysorted.com.au/contact).*
[**Contact us today here**](https://finallysorted.com.au/contact) to see if we're the type of people you'd like to work with.
**Do we sound like the type of people you'd like to do business with?**
Call us today on 1300 137 403 or email us [here](https://finallysorted.com.au/index.php?Itemid=704) for a no-obligation private chat about your situation.
---
**Drew Browne** is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses. He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog [here](https://finallysorted.com.au/index.php?Itemid=1267). You can connect with him on [LinkedIn](https://www.linkedin.com/in/drewbrowne/). Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.
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