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  • 06-07-2005 12:00pm
    #1
    Blue Duck
    Registered Users Posts: 222 ✭✭


    Can somebody pls explain the difference between gross rate and apr in relation to a mortgage?

    I know what apr is just not sure about the gross rate thing.

    Thanks


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    #2
    Victor
    Registered Users Posts: 78,371 ✭✭✭✭Victor


    APR is the effective rate you pay -

    If I charge you 10% interest on a loan of €100 over one year, on the face of it, the interest is €10. AFAIK this is the gross rate.

    If interest is calculated and applied daily or monthly, you will end paying more. You also are likely to be making payments during the year - a reducing balance. If you are late or use an exotic payment method, you may incur charges, some payments schemes insist on some unavoidable charges like an account maintenance fee or transaction fees. I am obliged to include the full cost of credit including the effect of the calculation period, reducing balance and charges* to create the APR (for loans) / CAR (for deposits).


    * I get the impression it is only the unavoidable charges are included, as I can't predict when you will be late in your payments.


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    #3
    Victor
    Registered Users Posts: 78,371 ✭✭✭✭Victor


    Copied to BEF.


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