Australian Comparison Rate Reverse Calculator
The comparison rate is calculated on a $150,000 reference loan. Find out what your true effective rate is for your actual loan size, and compare lenders on a like-for-like basis. All figures in AUD.
The comparison rate is legally required to be calculated on a A$150,000 loan over 25 years. This means a lender's comparison rate is only exactly right for that specific loan size — for your A$600,000 loan, the comparison rate overstates or understates the fee impact.
Fixed fees have proportionally MORE impact on small loans and MUCH LESS impact on large loans. A $500 annual fee represents 0.33% on a $150K loan but only 0.05% on a $1M loan — yet the comparison rate is always calculated on $150K.
| Loan Size | Advertised Rate | Your True Effective Rate | Gap from Advertised | Annual Fee as % of Loan |
|---|---|---|---|---|
| A$200,000 | 5.9% | 6.054% | +0.164% | 0.127% |
| A$400,000 | 5.9% | 5.972% | +0.082% | 0.063% |
| A$600,000 (your loan) | 5.9% | 5.945% | +0.055% | 0.042% |
| A$800,000 | 5.9% | 5.931% | +0.041% | 0.032% |
| A$1,000,000 | 5.9% | 5.923% | +0.033% | 0.025% |
How to Use This Comparison Rate Reverse Calculator
Enter the lender's advertised rate and comparison rate, along with your actual loan amount and term. The calculator works backwards from the comparison rate to determine the implied annual fee, then recalculates your true effective rate for your specific loan size.
Why the Reference Loan Matters
By law, all Australian lenders must calculate their comparison rate based on a $150,000 loan over 25 years. This is the NCCP Act reference loan. If you are borrowing $600,000, the same fixed annual fee represents a much smaller proportion of your loan — so your true effective rate is lower than the comparison rate. For borrowers with smaller loans, the opposite applies.
Advanced and Pro Tiers
The Advanced tier shows the reference loan adjustment in detail, decomposes the fee drag, and ranks up to 3 lenders by their true effective rate for your loan size. The Pro tier shows how the effective rate changes across different loan sizes, identifies hidden costs not captured in the comparison rate (LMI, valuation, government charges), and explains why comparison rates on fixed loans are particularly unreliable.
The Comparison Rate Formula
Implied Monthly Fee = PMT(comparison rate, 300, -150000) − PMT(advertised rate, 300, -150000)
Implied Annual Fee = Monthly Fee × 12
Your Effective Rate = solve for r where:
PMT(r, your_months, -your_loan) = PMT(advertised rate, your_months, -your_loan) + implied_monthly_fee
Note: Australian mortgages use monthly compounding in practice
The key insight is that the implied annual fee is a fixed dollar amount (not a percentage). For a $600K loan, the fee represents one-quarter of its percentage impact compared to a $150K loan — making the comparison rate an overstatement for larger borrowers.
Example: Sarah's $700K Sydney Mortgage
Recalculating the True Effective Rate
Sarah is comparing two lenders for a $700,000 mortgage over 30 years. Both lenders have an advertised rate of 5.89% but different comparison rates.
| Loan Amount | $700,000 |
| Loan Term | 30 years |
| Lender A Advertised Rate | 5.89% |
| Lender A Comparison Rate | 6.12% (+0.23%) |
| Lender B Advertised Rate | 5.89% |
| Lender B Comparison Rate | 5.95% (+0.06%) |
| Lender A Implied Annual Fee | ~$520/yr |
| Lender B Implied Annual Fee | ~$130/yr |
| Lender A True Effective Rate (Sarah's loan) | 5.964% |
| Lender B True Effective Rate (Sarah's loan) | 5.909% |
Even though both lenders advertise the same rate, Lender B is meaningfully cheaper for Sarah's $700K loan. The comparison rate gap looked bigger on Lender A, but the true effective rate gap for her loan size is what actually determines cost. Lender B saves approximately $30/month.