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Quick Mortgage question

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  • 01-03-2015 5:26pm
    #1
    maynooth_rules
    Registered Users Posts: 1,502 ✭✭✭


    We are sale agreed on a property and have a choice of two mortgage providers for our mortgage. They both have the same interest rate and the same monthly payments. The Apr for one of 4.33 while the Apr for the other is 4.4.What exactly does this mean and what is the difference between Apr and the actual interest rate. Apologies if it is a silly question


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    #2
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    APR stands for 'Annual Percentage Rate'
    Its a composite of the interest rate- charged over the course of the year- alongside any other fees that might be associated with the rate.

    I.e. if the interest rate is compounded daily- rather than monthly- you'll have a different APR- or if there is a small monthly charge on one account but not on the other- it features in the APR.........


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    #3
    maynooth_rules
    Registered Users Posts: 1,502 ✭✭✭maynooth_rules


    Would that mean that I will be paying a little extra every year for the mortgage with APR rate 4.4 rather than the one with a 4.3 rate?


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    #4
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    Minor. It could be related to how interest is compounded- or it could be a very minor little charge applied on a periodic basis. Its nothing of any major concern.


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    #5
    BazzaDP
    Registered Users Posts: 69 ✭✭BazzaDP


    maynooth_rules wrote: »
    Would that mean that I will be paying a little extra every year for the mortgage with APR rate 4.4 rather than the one with a 4.3 rate?

    Yes. APR rates can be directly compared as it's a standardised calculation. Anything that isn't an APR rate is more difficult to compare as the terms and calculations might not be the same. That's the main point of regulation insisting that APR rate is always shown.


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