APRC (annual percentage rate of charge)

APRC (annual percentage rate of charge) is the total yearly cost of a mortgage — interest plus the standard fees — expressed as one percentage, so offers with different rates and charges can be compared like-for-like.

Why it exists

A lender can advertise a low headline interest rate and still make a mortgage expensive by adding fees on top: arrangement fees, valuation costs, and other charges that don’t show up in the rate itself. A second lender might quote a higher rate but charge fewer fees, and end up cheaper overall. Comparing headline rates alone can’t tell you which offer actually costs less.

APRC is the EU-standard figure designed to fix this. It folds the interest rate and the standard fees into a single number, calculated the same way by every lender, so a mortgage’s true yearly cost is visible in one figure rather than scattered across a term sheet.

On a mortgage, small differences compound over a long loan term. Because mortgages typically run for decades rather than years, even a modest gap between two APRC figures reflects a meaningful difference in what a loan costs over its life. That’s why comparing APRC, rather than the interest rate alone, matters most on the loans that last longest.

Not to be confused with

APRC is often confused with APR, the borrowing-cost measure used for shorter-term consumer credit such as credit cards and personal loans. APRC is APR’s mortgage-specific cousin: same underlying idea — total cost as one percentage — but calculated under mortgage-specific rules and used specifically for home loans.

It’s also distinct from the headline interest rate. The interest rate is one ingredient of APRC, not the whole picture. Two mortgages can share the same interest rate and still have different APRCs once their fees are factored in, which is exactly the gap APRC exists to close.

Anyone comparing mortgage offers, weighing whether switching lender makes sense, or deciding between fixed vs variable rates should treat APRC as the headline number to compare, not the interest rate alone.