The overall cost for comparison

chaddlad

hi all

i have looking at mortgages and am i lead to believe that when looking each mortgage company has to put, the simple to understand overall cost for comparison so has not to mislead us, so has long as the percentage it gives is lower than the rest its looking good, i know there are other things to consider but i am with the principlity building society and they arnt doing bad on the overall cost and i dont have to change but its nice to understand this when swithching

regards chaddlad

payless

Overall cost for comparison is sometimes used for individual products - and is based on the APR - I think most of us would agree in a market whereby people now change their mortgage more regularly- APR is not an ideal solution, but suppose its basic and clear


However it should also be used in certain other financial promotions- "Extract from FSA"-

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(1) A firm must ensure that if a non-real time qualifying credit promotion contains either price information for specific qualifying credit, or makes reference (either explicitly or implicitly) to the availability of credit for customers who might otherwise consider their access to credit restricted, the promotion also:

(a) states the APR; ..........................cont..


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thats why certain firms need to include this in their general ads, even though they may not even be discussing rates

coupleuk

What is the easiest way to calculate APR for a fixed-period loan (to include set-up and exit charges etc).

Then, we could compare a 2 year fixed rate deal with a 3 year fix for example or the total cost over 3 years for different deals with varying charges.

Is there an easy way ?

Thanks

payless

Unless the term of the incentive matches the term of the loan , the APR will take into account the follow on rate ...

illustrations may be prepared on a matching term , but if repayment basis obviously the monthly payment would show up as high

APR calculations for mortgages often also include some typical fees , which may not
actually be actual

That said it not that difficult to calculate - payments made , less capital reduction , plus fees- on a manual basis - although it would not be a statory APR illustration

payless

1Formula for calculating the APR for mortagges
certain laid down assumptions must also be made
Or better still order up some "Key Facts Illustrations / KFI's for a lender / broker ( if latter I suggest they are obtained via the lender rather than a third party system)