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We have noted that there are 7 things that affect your borrowing power:

1. Your income and commitments such as existing debts
2. Your living expenses (both fixed and discretionary)
3. Your credit history
4. The size of your deposit
5. The value of the property you own or plan to buy
6. Your other assets you own
7. The interest rate of your new loan, including the loan term and type.

A comparison rate is number expressed as a percentage figure that combines all the fixed costs of a loan, including fees and interest charges, into one annualised rate.

This rate enables you to see the true cost of a loan and to compare between different loans. Lenders are all required by law to calculate and publish the comparison rate for their loans.

Under the National Consumer Credit Protection Regulations (NCCPR), the comparison rate reports the annual cost of the loan, including the assumptions and fees:

• Monthly account fee (where applicable)
• Annual fee (where applicable)
• Establishment fee (where applicable)
• Valuation fee (where applicable)
• Mortgage documentation fee (where applicable)
• Settlement fee
• Loan amount of $150,000
• Loan term of 25 years
• Repayment frequency
• Interest rate

It is important to know that the variable costs of the loan aren’t included as these depend on the way you choose to operate your loan, for example the cost of transacting.