Current Mortgage AprMortgage Apr
Shows you the overall costs of a mortgage, plus charges, over the life of the mortgage (usually 25 to 30 years).
The APRC is engineered to make it simpler and more secure to make mortgage comparisons - although in practical terms, if you periodically remortgage them ( and possibly saving tens of millions of pounds by doing so ), APRC might not be that useful for you. Take, for example, a two-year fixed-rate mortgage with an initial interest of 1.99% and then the lender's default floating interest of 4.19% for the next 23 years of redemption.
A £999 APRC will be 3.7% after a 999 GBP reservation charge is included. Where Do Mortgage Credit Providers Use APRC? In 2016, the British monetary guard, the FCA, enacted a policy obliging creditors, intermediaries and settlement agents to notify the APRC. Since there is such a big discrepancy between the initial interest rates (now around 1.5 to 2.5%) and the lender's default interest rates (usually 4 to 5%), the FCA was hoping that the APRC would give the borrower a more real impression of how much interest they would be paying on their mortgage.
Ultimately, the main objective, especially when coupled with the rigorous accessibility tests that all creditors must pass, is to make sure that you do not end up with a mortgage that you cannot afford to pay back. The APRC and Remortgaging: APRC is calculated on the basis of the overall life of a mortgage - usually 25 or 30 years.
So if you take a two year mortgage at a 1.99% fix interest and then after two years at another competing offering remortgagegage, then you never repay the SVR of the creditor and the APRC has not provided much support. The APRC is only really important if you stay with your mortgage and never change - but because your lender's SVR is so high, you should almost always change to a new mortgage when your interest rates expire.
A lot of mortgage loans come with a £1,000 or more handling or handling charge. When you change your mortgage every two or three years, these charges total up. Sometimes it is less expensive to choose a free mortgage, even if the interest is higher. Check our guides on when you are remortgage your home to have more detail on selecting the right mortgage.