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What do loan comparison rates actually mean?

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Your Investment Property | 14 Nov 2013, 12:00 AM Agree 0
A question I field often from investors is, just what is a mortgage comparison rate and how can you use it to get a better deal on your home loan?
Here’s the thing: the interest rate you pay on your loan is just one part of the cost equation. You may also be liable to pay annual package fees and/or monthly account-keeping fees, and your interest rate could be discounted further, depending on the size of your loan.
  • We Find Houses | 14 Nov 2013, 05:11 PM Agree 0
    Paul will be happy to answer any question through this forum thread!
  • Frustrated 1st timer | 27 Nov 2016, 03:05 PM Agree 0
    There is only one sentence in this post that matters to someone that is discovering the meaning of Comparison rate for the first time.

    "This means that for a loan of $150,000 over 25 years at 4.89%, with all relevant fees and charges taken into consideration, the actual amount the loan will cost is 5.55%."

    That IS the definition. Too many people and websites do into the calculations and "its too complex to explain how" and how it compares over different loan types and that its based on the $150K and , blah blah blah!! that doesn't define it at all. The only thing that matters is it evens out the playing field by comparing apples with apples (i.e. different loans have different additional costs even though the actual loan interest rate might be the same) and includes all fees and charges for the comparison instead of the base % interest of the loan. So simple.... you would think.
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