When applying for a mortgage or any other type of loan, there’s a lot of technical jargon you have to wade through. One of the most important things you need to understand is the APRC and interest rate of the loan you’re taking out. Although closely related, these two details are very different and you need to know the exact value of each before you sign on the dotted line.
When you apply for any type of loan, the amount you’ll pay every year in interest should be clearly displayed. When applying for a mortgage, this rate will probably be somewhere between 1.5% and 4.2% depending on the type of loan you’re applying for. In most cases, your initial interest rate will be fixed for a set period of time before reverting to the bank’s standard rate. This means that, every year, you’ll pay between 1.5% and 4.2% of the total value of your loan in interest. When you apply for your mortgage you should receive a detailed breakdown of how much this interest will actually cost you over the lifetime of the loan. The faster you pay off your mortgage, the less you’ll end up paying in interest.
Talking about the Annual Percentage Rate of Charge (APRC) of your loan, @YourMoneyAdvice says:
“[APRC] is slightly different from the interest rate because it is made up of the interest rate plus any fees that are automatically included in your loan.”
This means that, in essence, the APRC gives you a more complete picture of how much you’ll actually be paying to your lender every year. In some cases, the APRC and interest rate of your loan can be very different, so it’s important to look at both before you agree to the mortgage.
Finding the best deals
When applying for a mortgage, there are many different factors you need to take into account if you want to secure the best deal. As well as interest rates and APRC, you need to look at how long the rate will be fixed for, how much arrangement fees will cost you and any other factors that may impact on the affordability of your mortgage. In most cases, the best way to find a good deal on a mortgage is to seek expert advice before you apply for the loan. An experienced mortgage advisor will be able to compare all of the deals currently available and match you with a lender whose products best suit your needs.
To find out more, or to receive expert advice for your mortgage application, explore our site, or get in touch with a member of our team today.
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Written by: Editorial Team