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Interest rates

What to consider when comparing interest rates

Roisin Broderick, Content Specialist, Keystart

25 Mar 2022 • 3 min

If you're thinking about your Keystart interest rate, you've probably looked around at other interest rates at other lenders. Interest rates vary a lot between lenders, and between different home loan products. You may see an advertised rate below what you are paying with Keystart, but like any big change, it is important to do some research so you can weigh up your options carefully. 

Fixed vs variable rates

The interest rate on a variable rate home loan can change at any time, either up or down. The rate can be influenced by changes in the Reserve Bank of Australia's official cash rate or the lender's own costs. Market circumstances and competition between lenders can also lead to interest rate changes. 

Keystart home loans use a variable interest rate. Read more about how we set our interest rate.

Lenders may also offer fixed rate home loans. This rate allows you to lock in an interest rate on your loan, typically for one to five years. Fixed rates can protect against interest rate rises but also means you won’t benefit from falling interest rates.

Is it an introductory rate

When comparing rates, be sure to ask if the rate has a set period, often referred to as an introductory or honeymoon rate.

For example, it may be that a rate advertised runs for the first twelve months of the loan, but then reverts to the lender’s standard variable rate.

Beyond the rate

Consider all the costs associated with setting up a new loan with another lender, including things like lender's mortgage insurance (LMI), fees and charges and of course how much of a deposit you need to have upfront in order to qualify for a loan with a new lender.

What's the maximum loan to value (LVR)

Some rates are only available if you have a loan to value ratio above a certain percentage. 80% maximum LVR is quite common with home loan lenders, meaning the maximum amount the loan can be is set to 80% of the value of the home.

For example, if Jude's home is worth $395,000. Bank X is offering a low rate based on a maximum 80% LVR. The maximum amount Bank X will lend Jude is 80% of $395,000, which is $316,000.  If Jude wanted to refinance with Bank X, her loan balance would need to be $316,000 or less to qualify for the advertised home loan.  

Compare key facts sheets

To help consumers compare different lenders, all Australian lenders are required to provide key facts sheets, which include comparison rates on financial products. This is a very handy tool when comparing rates and home loans. You can view Keystart's key facts sheets under each of our loan products. View our loan products and key facts sheets for each product here

Read more about the true costs of home loans?

Benefits beyond the loan

Some lenders may be able to offer other benefits with a home loan, almost as a package. This may include credit cards, insurance discounts and offset accounts. Be sure to check all the conditions on these benefits and weigh up against your requirements.

Check carefully if any benefits come with a limited time, for example, a new credit card with a lower rate that may be offered for the first twelve months of the card only.

Costs of the new loan

Be sure to gather all the information on any fees and charges with the new loan. All lenders will be able to provide you with all the fees and charges associated with a home loan. You will need to weigh up what works best for you in your own situation.

Keystart’s interest rate

Keystart aims to provide a pathway into home ownership sooner with our low deposit home loans. Given the low deposit nature of the lending we provide, Keystart’s interest rates policy enables us to manage our lending risk responsibly whilst remaining focused on our vision.

See Keystart's current interest rates here