Comparing a 7.80% two-year fixed mortgage quote in Sydney

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loft.balanced

First-time buyer
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Getting this comparison wrong could leave me with an affordable payment now but an uncomfortable reset in two years. The quote is 7.80% on a Sydney purchase of about A$1,307,000, and the lender’s fees and applicable loan-to-value band make the lower advertised figure less useful.

The monthly gap between the offers is modest, so I’m trying to compare the full two-year outcome rather than chase the smallest payment. Should I focus on cash paid, interest charged and the remaining balance, with fees included separately? I also need to verify the portability and early-repayment wording, then model what the payment could become after the fixed period.
 
For a two-year decision, I’d compare total cash paid during those two years plus the loan balance remaining at the end. That captures fees and differences in repayment structure. APR can still be useful, but it may assume a longer holding period than yours and make upfront costs look less significant than they are.
 
One detail now seems more important than the A$1,307,000 price: how much will you borrow, and which LTV band does that put you in? Two offers can look close on monthly payments but require very different cash at completion.

I’d also confirm how each lender treats its setup charge. Paying it from savings reduces the cash you retain, whereas financing it increases the balance and attracts interest. Once those figures are fixed, the two-year cost comparison will be much more meaningful.
 
I wouldn’t choose solely on the two-year cash total. If there’s a realistic chance of selling, refinancing or making larger repayments before the fixed period ends, restrictive early-repayment terms could erase a small monthly saving. I’d also model the payment at the reset point rather than assuming an easy refinance will be available.
 
I’m less convinced portability deserves much weight unless a move during those two years is genuinely likely. Even then, confirm exactly when it applies and whether a new property or changed loan-to-value could affect it. A feature that sounds flexible is not necessarily valuable in the circumstances you eventually face.
 
The scenario comparison makes sense, but it still depends on what you realistically expect to do before or at the two-year mark. A table based only on keeping the mortgage could favour a cheap but restrictive loan when an early sale would produce the opposite result.

Use the same borrowing amount, term and payment dates for each quote. Record initial charges, repayments, interest, the balance after two years and any early-exit cost. Then run separate cases for staying, refinancing at expiry and selling during the fixed period. I’d add the payment after a higher reset rate as well; that affordability figure may matter more than the small difference between lenders today.
 
Agreed on using scenarios rather than one headline figure. I’d ask each lender for a written breakdown based on the identical loan amount and LTV, including the balance at the end of the fixed period and the applicable early-repayment conditions. Then stress the post-fix payment at a higher rate. If affordability becomes tight there, the small current monthly difference is not the main risk.
 
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