Understanding APR and interest rates is really important for knowing what you are being charged on your mortgage. The Annual Percentage Rate is what your lender charges you to borrow the money — it’s the cost/charge on your loan.
Interest rates are an important factor to consider when choosing a mortgage lender, but the APR might be much more useful for deciding the best mortgage for you. There are a couple of terms you need to be aware of.
APR/APRC = Annual Percentage Rate of Charge.
The APRC takes into account all the costs involved over the term of the mortgage such as set-up charges and the interest rate. The lower the APRC, the lower your repayments and cost over the term of the mortgage.
When you compare mortgage lenders, APR is listed alongside the Interest Rate. These figures can be quite similar, but how do you use them to compare mortgages? How does the difference between APR and Interest Rate help you decide?
If two lenders charge the same interest rate, look at the APRs listed and compare them. The lower APR indicates that this loan may be cheaper over its lifetime.
But, APR isn’t the only thing to examine when choosing your mortgage lender. You’ll still need to make sure this product applies to you (some are for account holders only, or offer specific rates to buyers with deposits of over 10%).
You’ll also need to check the details of the individual lender, and make sure that they’re compatible with your budgets and goals. It’s a big task, but this work can all be accomplished by a broker like Greenway.
We’ll give you answers to your questions, and find the most appropriate mortgage products for you. If you want to ask us any questions about comparing APRs, or applying for your mortgage, contact us below.