How is APRC calculated?
The APRC is calculated using a formula that considers all your payments across the mortgage term, including any interest and fees. These are then averaged into a single yearly percentage, helping you understand the full cost of borrowing.
Here's what you include when calculating the APRC:
- Interest Rate. The rate charged on your mortgage or loan each year.
- Fees. Any upfront costs, such as valuation fees, arrangement fees, legal fees, and broker fees.
- Introductory period. If there’s a temporary lower rate, the lender considers how long it lasts and what rate it will revert to when the standard variable rate (SVR) takes effect.
- Loan term. The full length of your mortgage or loan.
APRC doesn’t account for things like overpayments, payment holidays or early repayment charges.
Benefits of APRC when comparing mortgages
Comparing mortgages can be hard, but the APRC could give you a clearer picture of what you’ll pay. It’s designed to help you compare mortgage options simply, clearly, and with greater peace of mind.
APRC vs interest rate
The interest rate is the interest you’ll be charged on your mortgage, not including any extra fees. The APRC goes a step further by including the interest rate plus any upfront or continuous charges. This can give you a clearer view of the total cost.
APRC vs APR
APRC work outs the full cost of your mortgage over its lifetime, including interest and fees. APR only captures the yearly cost, which could make the APRC more useful for long-term mortgage comparisons.
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