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Overall cost for comparison

waterbaby
waterbaby Posts: 500 Forumite
Part of the Furniture Combo Breaker
in Mortgages & endowments
I don't quite understand what the 'overall cost for comparison' is. I found this:

This is a figure which all lenders must quote when referring to mortgages. It is designed to show the total yearly cost of a mortgage stated as a percentage of the loan. It includes items such as the interest rate paid at the start of the mortgage, product fee, valuation fee and other charges commonly paid at the end of a mortgage. It is the overall cost for comparison purposes. This figure is intended to help customers compare the overall cost of different loans.

So is it:

((total interest + fees) / mortgage term) / original loan?

Thanks
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