What it means to compare mortgages
Moneysmart's guidance on choosing a home loan sets out what to weigh when comparing mortgages: the interest rate, the fees and the features. It suggests comparing loans from at least two lenders to find the loan that fits, and points to the Key Fact Sheet for each loan, based on the amount likely to be borrowed, which puts the figures for different loans side by side.
Moneysmart sets out that a home loan may be the largest debt a person takes on, and one held for the longest period. The decision it puts ahead of the rest is which of the two repayment types to take: principal and interest, or interest-only. Under a principal and interest loan, regular repayments cover both the amount borrowed and the interest charged on it, and the loan is paid off over an agreed term, such as 30 years. Moneysmart notes that most people take this type.
An interest-only loan works differently for an initial period, five years for instance: repayments cover interest only, so the amount borrowed is not reduced. Those repayments may be lower while the interest-only period lasts, then rise once it ends, and Moneysmart suggests checking that they stay affordable. The loan term shapes the rest: a 25-year term brings higher repayments and less interest, a 30-year term lower repayments and more, and Moneysmart suggests choosing the shortest term a borrower can afford.
Fixed, variable and split rates
Moneysmart sets out that a fixed rate holds for a set period, usually somewhere between one and five years, and repayments do not change during it even if market rates move. Moneysmart also sets out that a variable rate can rise or fall, and the lender decides whether to change it and by how much.
Moneysmart sets out that a partly fixed loan, sometimes called a split loan, puts one portion of the loan on a fixed rate and the rest on a variable rate. How the split falls is a choice, whether even halves or a smaller fixed share. Moneysmart's guidance, last updated on 16 September 2026, states that a rate even 0.2 per cent lower could save thousands of dollars over time, and the same guidance states that its mortgage calculator shows average rates for principal and interest and interest-only loans, across owner occupier and investment loans.
Moneysmart sets out that a fixed rate holds for a set period, usually somewhere between one and five years, and repayments do not change during it even if market rates move.
Fees, features and the Key Fact Sheet
Moneysmart notes that a loan with extra options or features can cost more than a plain loan. Offset accounts, redraw and line of credit facilities are among them, and Moneysmart describes most as a way of adding extra money to a loan so less interest is charged. Moneysmart's guidance, last updated on 16 September 2026, gives an example of a loan of $750,000 with an offset account holding $50,000 of savings, where interest is charged on $700,000. Moneysmart's guidance of 16 September 2026 adds that if the offset balance stays low, under $10,000 for instance, paying for the feature may not be worthwhile.
The Key Fact Sheet puts the cost of competing loans alongside one another. Moneysmart notes that the sheet is compulsory and that every lender lays it out in the same way, so loans can be compared like for like. It sets out the initial interest rate, the personalised comparison rate, the total to be paid back, the monthly repayment, and establishment and ongoing fees, and a sheet can generally be asked for from a broker, the lender directly, or the lender's website.
Moneysmart also suggests sorting features into must-haves and nice-to-haves before paying for any of them. Moneysmart suggests considering whether it is worth paying extra for features a borrower may never use. Moneysmart notes that a basic loan with limited features may leave a borrower better off.
Questions the fact sheet does not answer
The Key Fact Sheet does not carry every feature or condition. Moneysmart lists further questions to put to a broker or lender. These cover whether extra repayments attract a fee, whether there is an offset account or redraw facility, what using loan features costs, whether the loan can be switched later, and what break costs apply on early repayment or refinancing. Moneysmart also suggests asking what happens when a fixed or introductory rate ends, and what other charges might apply.
Before that point, Moneysmart suggests working out what can realistically be borrowed and comparing loans from at least two lenders. It suggests calculating what the costs would be if interest rates rose by three per cent, to leave some room in the budget, and points to a mortgage calculator that shows repayments at different rates.
Questions people ask
- What does comparing mortgages involve?
- Moneysmart sets out a first choice between a principal and interest loan, where repayments cover the amount borrowed and the interest on it, and an interest-only loan, where for an initial period repayments cover interest only. Its guidance then covers interest rates, fees and features, and the Key Fact Sheet issued for each loan, which is compulsory and laid out the same way by every lender.
- How does comparing mortgages work?
- Moneysmart suggests getting the Key Fact Sheet for each loan under consideration, based on the amount likely to be borrowed. It also suggests comparing loans from at least two lenders.
- What is a comparison rate?
- The comparison rate is a single figure combining the interest rate with most fees, which Moneysmart says can help in comparing the overall cost of different loans. It appears among the details on the Key Fact Sheet, alongside the interest rate and the total amount to be paid back.
- What is the difference between fixed and variable interest rates?
- Moneysmart sets out that a fixed rate stays the same for a set period, and repayments do not change during that time even if market rates move, and that a variable rate can rise or fall, with the lender deciding whether to change it and by how much. It also describes a split loan, where part of the loan is on a fixed rate and the rest on a variable rate.
- How much can I afford to borrow?
- Moneysmart suggests being realistic about what can be afforded, and suggests calculating what the costs would be if interest rates rose by three per cent. It points to a mortgage calculator that shows what repayments might be at different interest rates.