Interest Rates or APRs what do I need to look at?

katty11

Hi all

I'm currently looking for the best 2 yr fixed deal and notice a lot of deals give an interest rate and an APR. Stupid qn but what is the difference and what should I be looking at when comparing and using repayment calculators?

Thanks

Katty

Yorkie1

I think APR is the rate for comparison purposes.

opinions4u

Both.

Short term interest rate (e.g. fixed rate for 3 years with £999 fee) and long term APR (which gives you a clue as to how good the SVR is today, but is purely guesswork for tomorrow).

Ideally you want the best shorter term deal and the maximum flexibility to remortgage add the end of it.

jimjames

Having looked at some deals this week for my mortgage some of current rates are just crazy.

Eg

2 year tracker 3.79%, revert to 3.99% SVR after 2 years.
3 year tracker 4.99%, revert to 3.99% SVR after 3 years.

Maybe just me but why on earth would you take out a 3 year deal that is so much more expensive?

Also some deals have fees attached but generally these don't make sense - obviously it depends on amounts but some I've looked at were £999 fee to get a lower rate (3.29% compared to above) but the higher rate would only cost £500 over 2 years. Again why go for the fee when it is more expensive?

holly_hobby

The larger the loan the more impact a lower interest rate will make - and thereby it may make financial sense to pay a higher product fee, as this will be generally be easily re-couped within the total cost of interest over the given term.

Headline APR includes the mge interest rate being charged & all fees associated with the product & borrowing. (useful when comparing lenders with a similar or same interest rate)

Headline Interest rate is just that - the rate of interest alone being charged on the borrowings - it does not include any fees reqd to set up the mge.

Hope this helps

Holly