What is APRC on a mortgage?
APRC means Annual Percentage Rate of Charge. On a mortgage, it is an annualised measure designed to show the cost of credit using prescribed assumptions. It helps compare mortgage offers, but it is not a personal forecast of every future cost because the calculation relies on assumptions and the mortgage terms still matter.
APRC is defined and calculated under the FCA's mortgage conduct rules. It is a comparison tool rather than a description of exactly what an individual borrower will pay, since actual costs depend on the mortgage terms and any changes over the term. More on cost comparison generally is available on second charge mortgage rates.
What is the difference between an interest rate and APRC?
The interest rate describes the price charged on the outstanding borrowing under the mortgage's rate terms. APRC is a broader annualised comparison figure calculated using prescribed assumptions. Two offers can have similar initial rates but different APRCs, so both the rate details and the full mortgage illustration need consideration.
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What can affect a mortgage APRC?
A mortgage APRC can reflect the rate structure, relevant charges and assumptions about how the mortgage is repaid over its term. An introductory or fixed period and the rate that follows can matter. The mortgage illustration shows the terms used, so it is the document to read alongside APRC.
Rate periods, any reversion rate, applicable fees and the assumed repayment method can all influence the APRC shown for a particular product. The mortgage illustration is the document that explains exactly how these elements apply to a specific offer.
How should APRC be used when comparing mortgage offers?
APRC is most useful when offers are compared on a like-for-like basis, including similar borrowing amounts and terms. It should be read with the rate period, repayment type, monthly payment, fees, early repayment terms and total amount payable shown in the mortgage illustration. A lower APRC alone does not establish suitability.
A useful comparison typically looks at the loan amount, term, rate periods, APRC, monthly payment, total amount payable and any early repayment charge conditions together, rather than any single figure on its own. Fee categories that can affect this comparison are explained in second mortgage fees.
Does APRC include every possible mortgage cost?
APRC is calculated under prescribed rules and assumptions, so it should not be treated as a list of every possible future charge. Some costs or consequences may depend on later events or customer choices. The mortgage illustration and agreement set out the specific charges, including any early repayment terms.
Costs that depend on later decisions, such as early repayment or a change in circumstances, are set out in the individual agreement rather than being fully reflected in the APRC figure calculated at the outset.
Sources
- MCOB handbook (Financial Conduct Authority)
- Bank Rate (Bank of England)
- Second charge or second mortgages (MoneyHelper)
Frequently asked questions
What does APRC stand for?
APRC stands for Annual Percentage Rate of Charge. On a mortgage, it is an annualised figure calculated using prescribed assumptions and intended to help with comparing the overall cost of credit across different offers. It sits alongside the interest rate rather than replacing it as a piece of comparison information.
Is a lower APRC always better?
Not necessarily. APRC is a useful comparison aid when offers are broadly similar in amount and term, but it does not capture every personal circumstance or future choice. The mortgage illustration, monthly payment, fees and early repayment terms all need to be read alongside APRC rather than in isolation.
Does APRC include early repayment charges?
APRC is calculated under prescribed rules and assumptions, so it should not be treated as a complete list of every possible future charge. Whether an early repayment charge applies, and on what terms, is set out in the specific mortgage agreement and illustration rather than being fully captured by the APRC figure alone.
What is the difference between APR and APRC?
Both are annualised cost-of-credit figures, but the terminology and calculation basis used in mortgage documentation should be read in the context of the specific product and regulatory framework that applies. The mortgage illustration will show the relevant figure for that product, so checking the document itself avoids assuming generic equivalence.
Where can I find APRC on a mortgage offer?
APRC is normally shown in the regulated mortgage illustration and offer documents provided before a mortgage is agreed. These documents also set out the interest rate, fees, repayment terms and other costs, so they are the reliable source for a specific product rather than a general guide or advertisement.