In short: This calculator puts two home loans side by side and shows the monthly repayment, total interest and total fees for each over the term you choose, so you see which is actually cheaper. Rule of thumb: on a $600,000 loan every 0.10% of rate is worth roughly $35–$40 a month, so a lender charging a $400 annual fee needs to be about 0.10% cheaper just to break even.
- Loan A repayment$3,593.45
- Loan B repayment$3,651.49
- Loan A total cost (interest + fees)$705,491
- Loan B total cost (interest + fees)$714,535
- 5-year cost difference$1,507
A true comparison also weighs offset, redraw, rate-lock and exit fees, which are not modelled here.
Loan A is cheaper by: $9,044
That is a general estimate on standard assumptions. Every lender applies its own expense benchmarks, income shading and policy, so the real figure moves from lender to lender. Gorakh spent years as a senior credit officer deciding exactly these questions. Send him the numbers above and he will tell you what is realistic and which lenders fit — at no cost to you for home loans.
- A former senior credit officer reads itGorakh assessed loan applications on the lender side before he became a broker.
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Advertised rates rarely tell the whole story. Fees change the ranking, and a loan you keep for five years is judged very differently from one you hold for thirty.
How this calculator works
Repayments
Each loan's monthly repayment uses the standard principal-and-interest amortisation formula: loan amount multiplied by the monthly rate, divided by one minus (1 plus the monthly rate) to the power of negative months. Interest-only periods are charged as interest alone, then amortised over the remaining term.
Total cost
Total cost equals all repayments plus upfront fees, ongoing package fees and discharge fees, minus the loan amount. It is reported over the full term and over the horizon you set, typically five years, because most Australians refinance or move well before year 30.
Comparison rate
The tool also shows a comparison-rate style figure that folds known fees into the rate. The official comparison rate is standardised on a $150,000 loan over 25 years, which distorts fee impact for a Melbourne-sized loan. Our guide to the comparison rate explains why.
How to use the result
Judge the loans over the period you realistically expect to hold them. If you plan to refinance or buy again within a few years, weight upfront and discharge fees heavily; if you intend to set and forget, the rate dominates. Then check features: an offset account is valuable to you only if you keep cash in it. Lenders on a broker panel often price below the advertised rate, which is where a broker can beat the bank.
Worked example
A $600,000 owner-occupier loan over 30 years, principal and interest. For illustration, Loan A is at 5.80% p.a. with a $395 annual package fee and $600 in setup costs; Loan B is at 6.00% p.a. with no ongoing or setup fees.
| Measure | Loan A (5.80% + fees) | Loan B (6.00%, no fees) |
|---|---|---|
| Monthly repayment | $3,521 | $3,597 |
| Repayments over 5 years | $211,231 | $215,838 |
| Fees over 5 years | $2,575 | $0 |
| Total cost over 5 years | $213,806 | $215,838 |
| Total interest over 30 years | $667,387 | $695,029 |
| Fees over 30 years | $12,450 | $0 |
| Total cost over 30 years | $679,837 | $695,029 |
Loan A wins on both horizons, by about $2,000 over five years and about $15,000 over thirty. Had Loan A been only 0.05% cheaper instead of 0.20%, Loan B would have come out ahead over five years. That is the sensitivity a rate-only comparison hides.
What this calculator doesn't include
- Rate changes; both loans are held at their starting rate.
- Fixed-rate break costs. Read breaking a fixed-rate loan.
- Cashback offers, best treated as an upfront fee refund.
- The value of offset, redraw and repayment flexibility.
Tips to improve the outcome
- Ask each lender for pricing on your exact loan size and LVR; a 60% LVR loan usually gets a sharper rate than one at 90%.
- Compare like with like: a basic loan against a package loan is only fair if you value the package features.
- Put the annual fee in perspective: $395 on a $300,000 loan is 0.13%; on $900,000 it is 0.04%.
- Include discharge fees if you expect to refinance within a few years.
- Split the difference: a split loan can lock part of the balance at a fixed rate while keeping offset on the rest.
Frequently asked questions
How do I compare two home loans properly?
Compare the total cost over the years you expect to hold the loan, including interest, upfront fees, ongoing fees and discharge fees. Then weigh features such as offset, redraw and extra repayment limits. A loan that is 0.15% cheaper but charges a $395 annual fee is only better on balances above about $260,000. Finally, confirm each lender's real rate for your LVR rather than the headline.
Is a lower interest rate always better?
No. A lower rate with high fees can cost more, especially on loans under $300,000 or loans you plan to exit early. Fixed loans with low rates can also carry break costs and restrict extra repayments. Over five years the fee gap between two loans can be thousands of dollars, so run both through the calculator before deciding. Our fixed vs variable guide covers the structural trade-offs.
What is the comparison rate and can I rely on it?
The comparison rate is a legally required figure that blends the interest rate with most fees, calculated on a $150,000 loan over 25 years. It is useful for spotting fee-heavy products but inaccurate for a $650,000 Melbourne loan, where fees matter far less as a percentage. Use it as a red-flag check, then compare the actual dollar cost for your loan size.
How much does 0.25% make a difference on a mortgage?
On a $600,000 loan over 30 years, 0.25% changes the repayment by roughly $97 a month and total interest by about $35,000. On a $400,000 loan it is around $65 a month. That is why negotiating with your lender, or refinancing, is worth the effort. Test your numbers on the refinance calculator.
Talk to GNT Finance
GNT Finance compares loans from a broad panel of lenders on real pricing for your situation, not the advertised rate, and explains the trade-offs in plain language. Our home-loan service comes at no cost to you in most cases. Book a free consultation or call Gorakh Timilsina on 0426 403 703.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.