Mortgages
What is APR?
APR (Annual Percentage Rate) is the indicator that shows the true total cost of a loan, expressed as an annual percentage. It is the European standard for comparing loans and provides a complete picture of how much you will actually pay for the loan.
What does APR include?
- Nominal interest rate (base loan rate)
- Processing/origination fees
- Monthly administration fees
- Other mandatory costs specified in the contract
Why is it important?
A loan with a lower nominal rate may have a higher APR due to high fees. That's why APR is the most reliable indicator for comparing loan offers.
Practical example
Example: A loan with 7% interest rate and 1% processing fee will have an APR of approximately 7.5-8%, depending on the term.
Tip
When comparing mortgages, always use APR to find the offer with the lowest total cost.