You will note that this website, and in fact any advertising for home loans, now carries a CCR Rate. This is the Compulsory Comparison Rate. The Government introduced legislation on the 1st July 2003 in an effort to assist the public to compare the various home loan products by various lending institutions.

For example, how do you compare Lender A offering a 12 month honeymoon rate with Lender B offering a lower standard rate? The purpose of the legislation is to require financial institutions to disclose all known costs associated with these loans by reducing these costs to a single interest rate – the comparison rate.

The comparison rate is calculated using a standard formula taking into account:

     The amount of the loan
     The term of the loan
     The repayment frequency
     The interest rate

Ascertainable fees and charges connected with the loan except for - Government charges such as Stamp Duty and mortgage registration charges
Fees and charges that may or may not be charged because they depend upon certain events occurring e.g. default fees
Fees and charges which are unascertainable at the time of advertising

The comparison rate will therefore be generally higher than the advertised interest rate because it takes into account all known costs of the loan over the specified time period. In the case of home loans this will generally be an amount of $300,000 over a 30 year term – the maximum terms specified by the legislation.

Different amounts and terms however will result in different comparison rates and some other costs which may influence the cost of the loan such as early discharge fees are not included.

The comparison rate will not allow you to compare the different features that a loan may have and therefore the CCR by itself should not be the sole basis for choosing a particular loan.