Annual percentage rate of charge, or APRC, is a term you are going to regularly encounter when you start looking at various mortgages offered by various lenders. Put simply, the APRC reflects the total cost of a loan, including interest charges and all product fees. This is shown as a percentage rate rather than as a sum of money.
The annual percentage rate is an industry standard calculation. This means all lenders use it. You can therefore look at the APRC for each loan you are reviewing and use it to compare different mortgages more accurately against each other.
This would be almost impossible to do if you were using other information, such as the basic interest rate and the fees and charges connected with each deal. Cashback would also muddy the waters when trying to work out whether one deal is better than another. APRC takes the hard work out of comparing different loans, as you can be certain of which ones are preferential to others.
Things to note about the APRC of a mortgage product
The most important thing to remember is that the APRC is calculated on the assumption that you maintain the loan for its full term. So, if you take out a 25-year loan offering an APRC of 3.5%, that APRC is worked out over the 25 years. If you changed mortgages at some stage during the term, the original APRC would no longer be valid.
However, you should still use this calculation to compare different products from different lenders if you’re looking for your first home loan or looking to swap from one to another.
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The Mortgage Broker
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