What is APRC on a mortgage or loan?
If you’re looking to take out a mortgage or a homeowner loan, you’ve probably come across the term APRC. But what does it mean? And how does it impact which loan may be the best value for money?
In this guide, we’ll cover:
- What APRC is in relation to mortgages and loans
- What a representative APRC is
- How APRC is calculated
- APRC vs APR
- The purpose of APRC
- How to get the lowest APRC on mortgages and loans
Need more support with understanding loans? Explore our Loan Basics page for more useful guides.
What is APRC?
APRC stands for Annual Percentage Rate of Charge.
It is shown as a percentage and is the annual cost of a secured loan or mortgage. APRC includes all charges (such as fees and other costs). It is calculated as if you kept your secured loan or mortgage for the full term without changing it, and also allows you to see costs upfront.
APRC is used to compare mortgages and homeowner loans (the type of loan that is secured against your house).
Throughout this guide, when we refer to secured loans, we are specifically referring to second charge secured loans taken out alongside an existing mortgage, rather than first charge mortgages used to buy a home.
As some mortgages offer a lower rate of interest for the first few years, the way the APRC is calculated reflects this. APR, on the other hand, uses just one rate for one year.
APRC shows you the impact that the different rates and any charges could have over the entire lifetime of the mortgage or loan. This will help you to compare alternative options.
What is the point of APRC?
The main purpose of APRC is to give you a clearer picture of what a mortgage or secured loan will cost over time.
Many mortgage products come with attractive introductory rates, but these don’t last forever. Once that initial period ends, the rate often increases. APRC factors in these changes, along with any fees, to give you a more balanced view of the total cost.
This helps you:
- Compare different mortgage or loan products on a like for like basis
- Avoid focusing only on short term incentives
- Understand the long term financial commitment
Ultimately, APRC is there to help you make a more informed decision. It shows which loans might be the most suitable for you in the long run.
What is a representative APRC?
Representative or typical APRC refers to the rate at least 51% of people who are accepted for that product will pay. This means up to 49% of people who take out that product may pay a higher APRC than advertised.
For secured loans, this Representative APRC may well depend on the amount borrowed, the fees and the term. Remember to check the Representative APRC when comparing products.
When a lender accepts you for a mortgage or secured loan, you should always double check the actual APRC that you are being charged. This could be different from the representative APRC. The rate of interest on some forms of borrowing is decided using your financial status and credit history.
How is APRC calculated?
APRC takes into account the initial rate, all fees and future rates. It then calculates a percentage which tells you how much the mortgage would cost you each year (if you were to stay with the same product until it is repaid).
Homeowner loan rates are calculated using a combination of factors that are specific to the individual. This includes loan amount, loan term, property value and credit history.
These factors will be assessed during the initial application stage to check the affordability and the total cost of the loan.
At Evolution Money, we believe it’s important to consider a person’s entire financial situation before making a decision on a loan.
APRC vs APR: What’s the difference?
APRC and APR are closely related, but they aren’t exactly the same thing. Understanding the difference between them can help you make more informed borrowing decisions.
APR (Annual Percentage Rate) shows the yearly cost of borrowing over a shorter period, typically based on a single interest rate and including certain fees. It’s commonly used for unsecured borrowing like personal loans and credit cards.
APRC, on the other hand, takes a longer-term view. It reflects the total cost of a mortgage or secured loan across the full term. This includes any introductory rates, future rate changes and all associated fees. For this reason, APRC is particularly useful for mortgages and secured loans, where interest rates often change after an initial fixed or discounted period.
In simple terms,
- APR gives you a snapshot of borrowing costs over a shorter timeframe
- APRC shows you the bigger picture across the entire life of the loan
Because of this, APRC is generally the more accurate measure when comparing mortgages or homeowner loans.
See our dedicated guide for more information about APRs.
How can I get a mortgage with a low APRC?
There are a few things you can do to try and access lower APRCs on mortgages and loans:
- Improve your credit score: Lenders use your credit history to assess risk. A stronger credit score may help you access more competitive rates and lower overall costs.
- Save for a larger deposit: The more you can put down upfront, the lower your loan-to-value (LTV) ratio. This could lead to better rates and a lower APRC.
- Choose your term carefully: A shorter term could reduce the total amount of interest paid, which may lower your APRC. However, monthly payments may be higher.
Apply for a secured loan with Evolution Money
At Evolution Money, we offer transparent APRC rates on our secured loans. We offer secured loans for homeowners up to £105,000, with flexible loan terms from 3 to 20 years. Take a look at our customer reviews to see why we’re rated ‘Exceptional’ on Feefo.
Check your eligibility with our online form today.
All loans are subject to status and eligibility. Available to UK homeowners aged 21 – 70. Terms and conditions apply. Not all applicants will be accepted.
Don’t rush into securing a loan against your home. Falling behind on mortgage or secured loan repayments may put your home at risk of repossession.
Representative 17.46% APRC (Variable)
For a typical loan of £23,120 over 120 months with a variable interest rate of 17.46% per annum, your monthly repayments would be £442.07. This includes a Product Fee of £2,312.00 (10% of the loan amount) and a Lending Fee* of £763.00, bringing the total repayable amount to £53,047.80. Annual Interest Rates range between 8.6% to 27.87% (variable). Maximum 50.00% APRC. *Lending Fee varies by country: England & Wales £763, Scotland £1,051, Northern Ireland: £1,736.
Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
