How to choose a home loan: A NAB and Citi loan comparison
It can be overwhelming looking at home loans. Tools like our
home loan repayments calculator
or
comparison hub
can be very good starting points to give you key numbers, though there’s still more you can do.
The overall repayment costs are important but when deciding between home loans you also need to consider extra features and potential fees. These can tip the scales for you.
As an example, we’ve compared two basic home loans with the same starting interest rate but with slightly different features and fees.
| Home loan | NAB Base Variable Home Loan Special Offer | Citi Basic Variable Home Loan |
| Interest rate | From 2.29% (2.33% comparison rate*) for 80% LVR | From 2.29% (2.34% comparison rate*) for 80% LVR |
| Maximum loan amount | No maximum | $4,000,000 |
| Upfront fees | Upfront fee of $0 | Upfront fee of $649 |
| Extra repayments | Free | Free |
| Redraw facilities | Free with a $500 minimum | Free |
| Repayment frequency | Weekly, fortnightly or monthly | Weekly, fortnightly or monthly |
| Offset account | No | No |
| Maximum LVR | Up to 95% LVR | Up to 90% LVR |
| Discharge fees | $350 | $350 |
Let’s look at a basic example.
Mariano and Dolores are looking to buy a three bedroom home in the suburbs. The house they want is selling for about $1,000,000 and they only have a 10% deposit of $100,000 saved up, which means they have to borrow $900,000.
With the NAB Base Variable Home Loan Special Offer , the couple won't get the 2.29% (2.33% comparison rate*) rate because they don’t have a 20% deposit. Instead, with a 10% deposit their interest rate would be 2.99% p.a (2.99% p.a. comparison rate*).
Here are the estimated numbers for the 90% LVR rate:
- Monthly repayment: $3,790
- Total interest payable : $464,250
- Total paid in 30 years: $1,364,250
Alternatively, with the Citi Basic Variable Home Loan , the interest Mariano and Dolores would get with a 10% deposit starts at 2.54% p.a. (2.59% p.a. comparison rate*) rather than the 2.29% (2.34% comparison rate*) rate.
Here are the estimated numbers for the 90% LVR rate:
- Monthly repayment: $3,575
- Total interest payable: $386,940
- Total upfront fees paid: $694
- Total paid in 30 years: $1,287,634
Which home loan works better here?
Even with upfront fees the Citi Basic Variable Home Loan is actually $76,616 cheaper! This is assuming Mariano and Dolores receive the lowest possible rate for their 90% LVR for the examples given. We are also not taking into account that variable rates fluctuate during the life of the loan, so take note of that.
If you are interested in comparing more home loans, look at some of the best home loans in Australia. If you’re looking for more low rate variable home loans, check out the chart below.