So what is Annual Percentage Rate of Change, (APRC) ? While it may seem confusing at first, APRC is a helpful tool that shows us the true cost of mortgages, so we can compare them to find the cheapest option. That’s why the CCPC [1] recommends using APRC to compare mortgages.
APRC is a really handy guide that tells us which mortgage is the best value for money if we see it through. APRC takes all costs involved in a mortgage and converts it into a percentage. This percentage shows us how much a mortgage costs after every factor is taken into consideration.
This is really helpful when trying to find the best mortgage available, as all you have to do is look at the APRC percentage. The lower the percentage, the cheaper the mortgage is if it’s paid off completely.
In this article, I will be discussing APRC in a bit more detail to help you better understand how it works, why it is useful to us, the difference between APR and APRC, how APRC is calculated and finally, how to get a loan with low APRC.
- What is APRC?
- Why is APRC useful?
- What is the difference between APR and APRC?
- How is APRC calculated?
- How to get a loan with low APRC?
- Summary
1.What is APRC?
Annual Percentage Rate of Change (APRC) is a useful tool when comparing mortgages. It shows us the total cost of a mortgage when all factors are taken into consideration.
Factors such as fees and interest rates will greatly affect how much your mortgage will cost you overall.
APRC will take all these factors into consideration to show us in percentage form how much a mortgage with a particular lender will cost us if we see the mortgage through to the end.
It helps us see at a glance which mortgage provider offers the best mortgage to us after all costs have been taken into consideration. Remember; the lower the APRC rate, the cheaper the mortgage.
2.Why is APRC useful?
Marketers will often try to persuade homeowners into buying a specific mortgage with attractive offers such as low starting interest rates or cashback.
However, once you take the different factors into consideration, such as high variable rates introduced after the introductory period is over, you may soon discover that a once appealing mortgage is in reality quite expensive compared to other lenders.
APRC helps homeowners compare mortgages from different lenders and prevents them from being swayed by attractive starting rates and other misleading factors.
Let’s look at an example. Say a homeowner wants to mortgage a house worth €150000 and has a deposit down of €30000. APRC will help us see out of these 2 mortgages which is this best value for €120000.
| Mortgage A | Mortgage B | |
| Starting Rate | 0.99% for 24 months | 1.39% for 24 months |
| Standard Variable Rate | 4.99% for 23 years | 4.75% for 23 years |
| Fees up front | €160 | 0 |
At a glance, many may think that Mortgage A is the best option, as it offers a much cheaper starting rate.
However, as APRC will tell us, Mortgage B is in fact the better option, as it offers a lower standard variable rate than Mortgage A , as well as no fee up front.
| Mortgage A | Mortgage B | |
| Overall cost | €245,559 | €238,332 |
| APRC | 4.5% | 4.2% |
Because Mortgage B’s APRC percentage is lower, it means that it is the cheaper option, saving you €7,227 over the lifetime of the mortgage.
3. What is the difference between APR and APRC ?
It’s very easy to get confused between APR and APRC, as they are similar in name and in meaning.
Annual Percentage Rate (APR) works in a similar way to APRC, as it helps us compare the total cost of loans and credit. APR shows a percentage of how much interest the borrower pays on a loan, such as a mortgage, per year.
Annual Percentage Rate of Change shows a percentage of the total cost of a loan such as a mortgage after all factors are considered.
In comparison to APR, APRC doesn’t just show us the cost of a loan after one year, instead it shows us how much the loan will cost us once it’s paid in full.
4.How is APRC calculated?
APRC takes a variety of different factors into consideration, such as broker fees and different interest rates, to calculate how much your mortgage will cost you for the full period of the loan.
One vital piece of information that you must remember when looking at different APRC percentages on loans is that APRC takes all factors into consideration assuming that you will see this loan out until it has been PAID IN FULL.
APRC shows how much you will pay over the full term of the mortgage, meaning APRC is not useful if you are considering moving house or switching lenders.
So before you decide to look at different APRC percentages to help decide what the best mortgage for you is, consider certain factors, such as how long will I stay in this property? What life events are likely to happen in the near future that will affect my living situation?
If you think that you may be switching mortgages or moving property in the near future, APRC therefore might not be as important. This is because as you are planning to pay off the mortgage early and get a new one when you switch or move the introductory rate will apply for a larger proportion of the loan than shown in the APRC which assumes you will have the mortgage for the full term.
This is why although not making sense for everybody cashback and low introductory rates are a good option for those looking to switch regularly.
5. How do I get a loan with a low APRC?
Getting your loan with APRC is influenced by a variety of factors like:
The amount of available equity in your property– If you have a lot of available equity in your property and apply for a smaller loan, you are less of a risk to your lender, therefore earning a better interest rate bringing your APRC percentage down.
How much you want to borrow– The more you borrow, the lower rate you’ll be paying which again affects your APRC, as APRC assumes you will stay with this mortgage until it is paid in full.
The length of the mortgage- The longer your mortgage is the less you will pay per month, as the payments are stretched across a longer period of time.
Size of deposit– The more money you have in your deposit on a house, the lower the interest rate, as you are not seen as a risk to the lender.
Here’s the current APRC’s for a 4 year fixed rate compare.
| 4 Year Fixed APRC Comparison | up to 50% LTV | up to 60% LTV | up to 70% LTV | up to 80% LTV | up to 90% LTV |
| Avant Money | 3.19% | 3.19% | 3.21% | 3.45% | 3.48% |
| Haven Mortgages* | 3.40% | 3.40% | 3.40% | 3.40% | 3.40% |
| AIB | 3.55% | 3.72% | 3.72% | 3.72% | 3.89% |
| Permanent TSB | 3.89% | 3.89% | 4.02% | 4.02% | 4.16% |
| EBS* | 3.75% | 3.75% | 3.75% | 3.75% | 3.75% |
| Bank of Ireland** | 3.7% | 3.7% | 3.90% | 3.90% | 4.10% |
6.Summary – APRC
So to summarise, when you think APRC, remember-
APRC is a tool to help you compare mortgages and find the best mortgage available.
The lower the percentage, the cheaper the mortgage is once it’s paid full term.
APRC shows percentages assuming you will stick with one particular mortgage to the end.
Always predict changes in your living situation in the near future before thinking about using APRC to find the best mortgage.
What’s next?
If you have any more questions about stamp duty or buying a new property feel free to book an appointment with our financial advisors here at moneysherpa free of charge here.
If you want to see what you could save by calculating your repayments and see all mortgage provider rates you can click here.
If you want to know more about other mortgage providers you can click here.
If you want to know more about longer term fixed rates, you can check out our deep dive best fixed rate mortgage piece here or how fixed versus variable compares here.
If you want to know more about switching you can click here. Or you can check out our handy switching mortgage guide here and our remortgaging guide here. If you still have questions check out our switching Q&A here.
If you are thinking of freeing up some extra cash from your home, take a look at our mortgage top up tips here or if you are over 55 our equity release rundown here.
If you want to get your savings started right now, set up a free no obligation video call with a mortgage sherpa here, covering not only the best rate, but also helping choose the lender most likely to approve you and helping take the pain out of the paperwork.
