Nila Sweeney

Q. I am thinking of taking out a home loan of approximately $300,000 and I want to know how comparison rates are calculated? Are they as important as what it is made out to be or are the features of the loan the most important?

A. For a loan amount of $300,000, the law states the comparison rate is calculated on a 30-year term. This means that it should not be calculated over 12 months or four or six years.

"Comparison rate is calculated taking into account the advertised interest rate of a loan as well its the upfront fees and ongoing charges to represent them as one easy-to-compare interest rate," explains Mark Bouris, chairman of Wizard Home Loans.

According to Bouris both the comparison rate and the features of the loan are very important. "The comparison rate empowers the borrower to compare 'apples with apples' when making those vital mortgage decisions," says Bouris. "By the same token, a loan with product features such as redraws, direct salary, crediting and the ability to pay weekly and fortnightly, can help make your mortgage work for you. By understanding such features and their benefits you can shave years off your loan and save money in the long term," he says.

If you would like to compare the different products based on comparison rates and features, you can simply jump on to our online website http://www.yourmortgage.com.au/rates/

Related: Home Loan Calculator

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan