Whats does mortgage rate mean?

jamesoshea

Registered User
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I've seen some figures for mortgage rates, but with a different APR figure, what do both numbers mean?


Thanks
 
The nominal rate of interest on a loan is the lower figure, this is the rate that is used in the calculations, the trick is in how it is used. If you borrow €100,000 @ 3% you will not pay €3,000, you will pay more - the APR reflects this. APR allows you to directly compare the cost of borrowing the same amount of money over the same period from different borrowers.
 
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So, APR is the real repayment figure? i.e there is a small difference in the 2 numbers, but it sure adds up on a big sum over time!!!
 
Yup - it sure does! Hence the reason why lenders are obliged to list the APR. Like listing taxes and charges on airfares ;)
 
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