What is the difference between APR and APRC?

APR shows the annual cost of borrowing including fees but typically based on the initial rate. APRC goes further by factoring in what happens after the initial deal ends, usually assuming you revert to the lender’s SVR. APRC therefore tends to be higher and represents a more conservative (worst-case) measure of cost.

Why is the APRC on my mortgage offer so high?

The APRC looks high because it assumes you will stay on the lender’s SVR for the rest of the mortgage term after your initial deal expires. SVRs are typically much higher than introductory rates. In practice, most borrowers remortgage to a new deal well before this happens, so the APRC figure rarely reflects what you will actually pay.

What is APRC? Meaning Explained | My Mortgage Sorted

APRC stands for Annual Percentage Rate of Charge. It was introduced under the EU Mortgage Credit Directive in 2016 and remains part of UK mortgage regulation. Like APR, it expresses the total cost of a mortgage as an annual percentage, but APRC goes further by attempting to account for what happens after any initial deal period ends.

For example, if you take a two-year fixed rate, the APRC calculation assumes you will revert to the lender’s standard variable rate (SVR) for the remainder of the term. This often produces a higher figure than the initial rate might suggest, because SVRs are typically more expensive than introductory deals.

APRC appears on the European Standardised Information Sheet (ESIS) that lenders must provide when you apply for a mortgage. While it provides a standardised comparison point, in practice most borrowers remortgage before ever paying the SVR, so the APRC can overstate the true cost. It is still useful as a worst-case scenario figure.

Example

You take a two-year fix at 4.0% with a lender whose SVR is 7.5%. The APRC might be shown as 6.8%, because it blends the two-year fixed period with 23 years at the SVR. In reality, you would almost certainly remortgage after two years and never actually pay that 6.8% averaged cost.

Key Points

APRC includes the initial rate, any reversion rate (usually the SVR), and all mandatory fees
It was introduced under the EU Mortgage Credit Directive and remains in UK regulation
APRC often looks high because it assumes you stay on the SVR after your deal ends
Most borrowers remortgage before the SVR kicks in, so APRC can overstate actual costs
It appears on the ESIS document you receive during the mortgage application