An existing or potential client may approach their mortgage broker for assistance with understanding the exclusions of comparison rates. In order to successfully assist their clients through the comparison rate calculation process, a mortgage expert should have a firm understanding of the processes and key factors that play into an individual loan comparison rate calculation.
Comparison rate calculations consist of certain exclusions, like stamp fees and other non-mandatory charges that have not been incurred through a home loan, including the following examples:
- Offset account fees
- Additional mortgage repayments
- Optional fees
- Early termination fees
However, just because the examples are excluded from a loan comparison rate calculation does not mean they should not be an influencing factor in an individual’s research and comparison processes. These non-mandatory charges can leave a borrower with no option but to pay a potentially large amount of additional fees that can result in financial troubles if not accounted for in the decision-making process.
During the comparison rate calculation process, there are certain fees and charges that are not exempt, including the following:
- The loan amount
- Fees that may include an establishment fee, settlement fee, documentation fee, annual fee, monthly fee, and an establishment fee
- The terms of a loan
- The loans interest rate
- The mortgage repayment frequency
Australia’s various lending establishments and their loan options may have different inclusions and exemptions, so we highly recommend completing in-depth research and comparisons prior to applying for a loan to ensure you receive the best rates, terms, and repayment frequency for your financial goals and requirements.