Comparison rates, fees and the Key Facts Sheet: what a home loan costs

In this article

Written by

Kooky

Builder of Shaka, the payment router that pays every agent their commission on closing date.

About Kooky and Shaka →

Two home loans can carry the same interest rate and still cost different amounts. One charges nothing beyond interest. Another adds an application fee on the first day and a service fee every month after it. A third wraps its fees into a yearly package. The rate printed in large type is identical in all three, and the money that leaves the borrower's account is not.

Australian credit law has two tools for making that difference visible before anyone signs. The first is the comparison rate, a second percentage that must sit beside an advertised interest rate. The second is the Key Facts Sheet, a one-format summary a lender has to produce for a borrower who asks. Around them sit the fee schedule of the loan itself, a ban on one kind of exit fee, a small set of government charges, and the disclosure papers a lender or a mortgage broker hands over along the way.

This guide takes each of those in turn for someone comparing loans on a Queensland property, then runs one worked example to show how much, and how little, fees move the total. It describes the general rules. What a particular lender charges is set out in that lender's own documents.

Loan size and term: the standard basis stated in the comparison rate warning under the National Credit Code. Lodgement fee: Titles Queensland schedule of fees for the 2026-27 financial year.

Where the comparison rate comes from

The comparison rate lives in Part 10 of the National Credit Code, the consumer credit law that forms Schedule 1 to the National Consumer Credit Protection Act 2009. The Part is short: ten sections, numbered 157 to 166. Its core rule is in section 160, whose heading says what it does: a comparison rate is mandatory in advertisements containing an annual percentage rate.

The idea has a Queensland history. Before 2010, consumer credit was regulated by the states under a uniform Consumer Credit Code, and that code was Queensland legislation which the other states and territories applied. Comparison rates were added to it by an amending Act of the Queensland Parliament in 2002. It was written as a trial, with a clause that would have ended it after three years. The scheme stayed, and it moved into Commonwealth law with the rest of the code.

Three further rules shape what a reader sees in an advertisement. Under section 164, as the Australian Securities and Investments Commission (ASIC) summarised it in its Report 313 on credit advertising in November 2012, the comparison rate must be no less prominent than the interest rate beside it. ASIC's view in that report is that a comparison rate printed smaller or fainter than the interest rate, placed away from it, or revealed only when a reader clicks or hovers, is likely to fall short. Section 163 requires a warning to travel with the rate. And section 158 takes continuing credit contracts, the Code's term for revolving facilities such as credit cards, out of the Part altogether.

The standard loan behind the number

A comparison rate is not calculated on the reader's own loan. For a home loan, the figure in an advertisement is worked out on a standard secured loan of $150,000 repaid over 25 years. Every lender uses the same basis, so two advertised comparison rates describe the same imaginary borrower.

The calculation itself is fixed by regulation 100 of the National Consumer Credit Protection Regulations 2010. In plain terms, it finds the single yearly rate that would produce the same stream of payments as the loan's interest and its counted fees together. A loan with no fees has a comparison rate equal to its interest rate. Each fee pushes it higher, and the gap between the two rates is a rough measure of how much of the loan's price sits in fees.

The standard basis has a side effect that matters to anyone borrowing a larger sum. A fee fixed in dollars, such as a yearly package fee, is the same whether the loan is $150,000 or several times that. Spread across a small loan it looks heavy; spread across a large one it looks light.

What the rate counts and what it leaves out

A comparison rate counts interest and the fees that are known in advance. It does not count everything a borrower may pay.

Government charges are outside it. The explanatory statement to the 2011 regulations that created the Key Facts Sheet says the comparison rate takes in fees and charges that can be ascertained when it is given, excluding government fees, charges and duty. In Queensland that puts the mortgage lodgement fee outside the figure.

Fees that depend on what the borrower later does are outside it too. The 2002 Act that introduced the scheme left out any fee whose charging, or whose amount, turns on an uncertain future event. A fee for a redraw, for switching from a variable to a fixed rate, or for a late payment falls into that group, because nobody knows at the start whether it will ever be charged. So does the cost of breaking a fixed rate early, which has its own guide in this magazine.

Savings are not counted either. A comparison rate has no way of showing what an offset account or regular extra repayments would take off the interest bill, because those depend on money the borrower may or may not have. Nor does it weigh features: two loans with the same comparison rate can differ in what they let a borrower do.

One more limit follows from the arithmetic. The rate assumes the loan runs for its whole term. An upfront fee spread over 25 years barely moves the percentage, yet a borrower who refinances after four or five years has paid all of it in a fraction of the time.

The Key Facts Sheet

The Key Facts Sheet answers the first weakness of the advertised comparison rate: it uses the borrower's own figures. It was created by the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Act 2011, which added Part 3-2A to the National Consumer Credit Protection Act, and the regulations that fill in its content commenced on 1 January 2012.

The obligation falls on the lender, and it has two limbs. Under section 133AC, a lender whose website lets consumers apply for or enquire about its standard home loans must make that website able to generate a Key Facts Sheet: it has to tell the visitor the sheet is available, say what information to enter, and produce an up-to-date sheet in a form that can be printed. Under section 133AD, a consumer who asks for a sheet by any other means, and gives a name and a way to be reached, must be provided with one. If the lender needs more information to prepare it, section 133AE requires the lender to say what is missing.

Not every loan qualifies. The Act limits the sheet to a "standard home loan": a lender's standard form contract for credit to buy residential property, or to refinance credit that was mainly used to buy it. The explanatory statement to the 2011 regulations narrows that to loans repaid by principal and interest across the whole term, at a variable rate, a fixed rate, or an introductory or discounted rate. An interest-only loan or a line of credit is outside the scheme, although the statement notes a lender may volunteer a sheet in the same format. Section 133AF also excuses a lender in a few situations, among them where it has already given the same sheet or reasonably believes the consumer would not be eligible for that loan.

The layout is fixed by Schedule 5 to the regulations, so one lender's sheet lines up with another's row for row. According to the explanatory statement, a sheet shows:

• the date it was produced, and a statement that it is not an offer of credit;
• the loan amount and term the consumer nominated;
• the interest rate, including any later rate and when it starts;
• a personalised comparison rate;
• the total amount to be paid back over the life of the loan, and the same figure expressed for each $1 borrowed;
• establishment fees and ongoing fees;
• the monthly repayment and the yearly total;
• for a variable rate, a note on what happens to repayments if rates rise, and for a fixed rate, what happens when the fixed period ends;
• where the loan allows free extra repayments, the effect of paying $200 more than the minimum each month.

The personalised comparison rate is the useful novelty. It runs the same regulation 100 formula with the same fees, but on the consumer's own loan amount and term in place of $150,000 over 25 years.

Moneysmart, ASIC's consumer website, describes the sheet as compulsory and identical in layout for every lender, and says it can be obtained from the lender directly, from the lender's website or through a mortgage broker. On its page on choosing a home loan, last updated on 16 September 2026, it also points out what the sheet does not show: offset accounts, redraw facilities, the ability to switch loans later, and what a fixed or introductory rate becomes when it ends.

The fees a home loan carries

Moneysmart sorts home loan fees into two main kinds. Establishment fees are charged once, when the loan is taken out. Ongoing fees are charged monthly or yearly to administer it, and may be called service or administration fees. It then tells borrowers to ask about other costs: fees for using loan features, break costs for repaying or refinancing early, and fees for making extra repayments.

The names are not standardised. An establishment fee may be called an application fee. An ongoing fee may be a monthly account fee or an annual package fee, the latter usually bundling a rate discount with other products. Some lenders charge separately for the valuation of the property or for preparing documents and attending settlement; others fold those into one upfront amount or charge nothing. At the far end of the loan, a discharge fee covers the lender's work in releasing its security. Where a deposit is small, a lender may also pass on the premium for lenders mortgage insurance, which protects the lender and is covered in a separate guide.

Whatever a fee is called, it has to be written down before the borrower is bound. The loan contract and the statement given before it list the credit fees and charges payable. That written list, more than any advertisement, is the price of the loan.

Government charges in Queensland

In Queensland a mortgage is lodged with Titles Queensland for registration on the title of the property. Titles Queensland's schedule of fees for the 2026-27 financial year does not list a mortgage by name: a mortgage, like a release of mortgage when the loan is finally repaid or refinanced, falls under the line for any other instrument, which is $248.04. The registry adjusts its fees each year on 1 July, so the figure holds until 30 June 2027 unless it advises otherwise. The same schedule prices a title search at $25.71.

These amounts reach the borrower through the settlement figures, usually as an item the lender or the borrower's solicitor has paid on the borrower's behalf. They are the same whichever lender is chosen, which is why leaving them out of the comparison rate does not distort a comparison between loans. The fee to register the transfer of the property and the transfer duty on the purchase are costs of buying, not of borrowing, and are explained in the magazine's guides on those subjects.

One rate, three prices: a worked example

The example below is illustrative. The loans are invented, the rate is a round number chosen for the arithmetic, and none of it describes a real lender's product.

Assume a Queensland buyer borrows $600,000 over 25 years at a variable rate of 6.00% a year, with monthly repayments, and that the rate does not change. The repayment on each of the three loans is the same: $3,865.81 a month. Over the first five years, that comes to $171,541 of interest on every one of them.

The loans differ only in their fees. Loan A charges none. Loan B charges an $800 establishment fee and a $10 monthly service fee. Loan C charges no establishment fee and a $395 annual package fee. The method is deliberately simple: fees are added to interest as they are paid, with no allowance for interest the borrower might have earned on that money, and the government charges are left out because they are identical for all three.

Two things stand out. First, the comparison rate ranks the loans in the right order: the loan with the highest comparison rate is the dearest after five years, by $1,975 against the loan with none. Second, the advertised comparison rate overstates the gap for this borrower. On the standard $150,000 loan, the $395 package fee lifts loan C's rate from 6.00% to 6.35%. Run on this borrower's own $600,000, the way a Key Facts Sheet would, the same fee lifts it only to 6.09%, and loan B's personalised rate comes out at 6.04%.

The chart shows that effect across four loan sizes, measured in basis points, each of which is one hundredth of a percentage point.

Fees still add up. Loan C's package fee would add up to $9,875 if the loan ran its full 25 years, against $3,800 for loan B. At this loan size, though, a full set of fees is worth less than a tenth of a percentage point on the rate. A loan with fees and a slightly lower interest rate can therefore cost less than a no-fee loan, and the personalised comparison rate on a Key Facts Sheet is the figure built to settle that question.

Exit fees: what was banned and what remains

Until 2011, many home loans carried an early termination fee, sometimes called a deferred establishment fee: a charge for paying the loan out within its first few years. Regulation 79A of the National Consumer Credit Protection Regulations now prohibits it. The Commonwealth's post-implementation review of the measure, published in 2015, records that the regulations were made on 23 March 2011 and apply to home loans entered into from 1 July 2011, across every kind of lender. It covers the fee however it is expressed: a flat amount, a percentage of the loan, a multiple of the monthly repayment or a sliding scale.

The same review sets out what the ban left alone. A break cost on a fixed-rate loan is still permitted, provided it reflects the lender's loss from the difference between the fixed rate and prevailing rates and does not add a penalty for leaving. A discharge fee that covers the lender's cost of releasing its security is still permitted. So is a fee for ending a contract before any credit has been drawn.

The ban is not retrospective. A loan taken out before 1 July 2011 may still contain an exit fee, and the review notes that such a fee is instead subject to the general test in the Code: a termination fee can be challenged as unconscionable if it exceeds a reasonable estimate of the lender's loss.

The papers a lender and a broker hand over

Price information arrives in stages. The National Consumer Credit Protection Act requires licensed lenders and licensed brokers to describe themselves before they describe a loan, then to put the costs in writing before the borrower commits.

The credit guide is about the business, not the loan. The regulations' own headings show its scope: it deals with a licensee's fees, charges and indirect remuneration, and with the external dispute resolution scheme, the Australian Financial Complaints Authority, a borrower can turn to.

A broker adds two papers of its own. If a broker intends to charge the borrower a fee, Moneysmart's page on using a mortgage broker, last updated on 4 September 2026, says the fee must be set out in a written quote, and the borrower must sign it before the broker can provide services or ask for payment. When the broker goes on to recommend a loan, the credit proposal brings together what the borrower will pay the broker and what the broker expects to receive from others.

That second part is the commission disclosure. Moneysmart explains that lenders generally pay brokers a commission for distributing their loans, that it is a percentage of the loan amount, and that it typically has an upfront part and an ongoing part. Brokers must tell the borrower about the commissions they may receive. A commission paid by the lender is not a fee charged to the borrower, which is why it is disclosed by the broker and does not appear among the loan's fees. Moneysmart also states that mortgage brokers must act in the borrower's best interests when suggesting a loan.

What Moneysmart says to compare

Moneysmart's method is short. It suggests getting a Key Facts Sheet from at least two lenders, each based on the amount the borrower is likely to borrow, after deciding three things that have to match for the sheets to be comparable: the repayment method, the repayment frequency and the type of interest rate. It then lists three things to compare: interest rates, fees and features.

On features, the regulator's site is cautious. Loans with more features can cost more, it says, naming offset accounts, redraw facilities and lines of credit, and it suggests a basic loan may suit some borrowers better than paying for options that are never used. Because the Key Facts Sheet does not show features, that part of the comparison has to be made from the lender's product documents.

For borrowers using a broker, Moneysmart supplies questions of its own: which lenders the broker works with and which it cannot access; how the broker is paid and whether that differs between lenders; why a loan is recommended; what fees will be paid; how the fees and features affect the total cost; and whether the broker can show more options, including the lowest-cost one.

Kooky, from Shaka

Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

About Kooky and Shaka →