Sometimes its good to read the fine print......
Ever wondered why banks often advertise two different rates, one huge one which can be quite attractive and a smaller one which is often more expensive?
Banks are required by law to advertise two rates, one being the loan offered interest rate and the often smaller less visible one known as a comparison rate.
A comparison rate is a handy tool to which details the true cost of the loan. It takes into account the various other fees and charges, such as annual package fees, monthly access fees and initial application and settlement fees. It is displayed it as a single interest rate and is handy as it allows you to compare different home loan rates from different lenders on a level playing field.
Next time you come across a cheap interest rate, make sure you also check out the comparison rate as the hidden costs and fees associated with ownership of the product can often mean the product you receive in the end costs more than a competing offering from another bank.