Which basic variable loan saves you $26,140?

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While the comparison rate can be a useful tool Your Mortgage has gone even further and developed its own method to uncover the true cost of a mortgage.

The team at Your Mortgage has worked out the 'true cost' of the 18 basic variable products from the banks and 29 products from non-bank lenders in our books, by taking into account each and every fee, including upfront, ongoing and deferred establishment fees as 16 September 2008.

By working out how much a given loan will cost you after a range of time periods - three, five and 10 years - we show you the impact that these fees can have on the total cost of your mortgage. By adding all fees to the cost of principal & interest (P&I), we calculate the true cost of a mortgage over three, five and 10 years. This month, we have based our calculation on a loan amount of $300,000 at 80% LVR taken over 30 years.

And the winner is...
ANZ Simplicity Plus smashed the competition in the bank group, thanks to its competitive interest rate of just 8.67% - one of the lowest rates among the top ranking bank products as at 16 September 2008. The product also came on top on both the 3-year and 10-year categories.

Over the five year period, ANZ Simplicity Plus is $1,960 cheaper compared to the average cost of the average basic loan in our database. Over 10 years, the product saves you $3,822.

In the non-bank category, Wizard's Rate Breaker Loan has once again dominated its it's rivals and cemented it's top position as having the best value basic variable rate loan, thanks to its low rate of just 7.88%. Wizard has also trumped the competition by winning all three-year, five-year and 10-year categories.

On top of the bargain interest rate, Wizard's Rate Breaker also carries a competitive upfront cost of just $760 with no ongoing fees. One thing to keep an eye on is the hefty deferred establishment fee of $2,150- this will be charged if you pay off your mortgage within three years or within 36 months.

For the complete list of top-ranking basic variable rate products, read the latest issue of Your Mortgage magazine, on sale from 14 November 2008.

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