You might think ‘APRC’ is just a rugby club you’ve never heard of before, but it is in fact a new way of showing the overall cost of your mortgage
APRC stands for ’Annual Percentage Rate of Charge’, and it’s something you’ll see on mortgage adverts and quotations from now on – including MoneySuperMarket’s mortgage tables.
This new bit of financial jargon that has arrived courtesy of the Mortgage Credit Directive (MCD) which came into effect on 21 March 2016. The MCD is European legislation designed to create a single market for mortgages and provide protection for consumers.
The purpose of APRC is to shows you ALL the costs of your mortgage, including any broker fees, so you can see exactly how much you’ll be paying over the full term of the mortgage.
So, for example, imagine you are searching for a fixed rate mortgage deal on MoneySuperMarket and you’ve got a 35% deposit to put down.
One of the most competitive deals currently on offer is Yorkshire Building Society’s two-year fixed rate deal, fixed at 1.14% for 24 months.
So you’ll see that interest figure – 1.14% – quoted alongside the initial monthly repayment cost (which is determined by the amount you borrow, and for how long).
You’ll also see the rate that the mortgage reverts to (4.99% in this case) once the two-year fixed term ends.
And now you’ll also be shown the APRC, or overall cost for comparison, which in this case is 4.6%.
The APRC shows the rate you’ll effectively pay if you stuck with this mortgage for its whole term. But in reality many people are only interested in the two or three-year deal, having the intention to remortgage again to avoid going onto the standard variable rate.
So while the APRC can provide a useful guide as to how much you’d pay if you were never to change the terms of the deal, the initial rate is probably the one that is still the most important, especially if you’re planning to remortgage once it finishes.
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