Colli Real Estate

interest rates/APR (mortgages)?

when looking for current mortgage interest rates (fixed rate for 2 years) i have seen that most offer an initial offer, a follow on rate and an overall cost for comparison.
An example of this is;
initial offer – 5.19%
follow on rate – 7.44% variable
overall cost for comparison – 7.4% APR
could someone explain to me what this jargon means? What is the interest rate on the loan? is it the APR rate? I am aware that APR is the annual percentage rate but would you be paying the 5% interest rate for the first 2 years then the higher rate after that?

It means that you will be paying 5.19% for the first two years and then, based on current interest rates, 7.44% for the rest of the term of the mortgage but that you will need to pay whatever the going rate is at the time, which may be more or less than 7.44%. The 7.4% they mention is the average amount you will pay over the term of the mortgage based on today’s rates.

Don’t worry, after the 2 years is up you can change to another fixed rate.

RTE 9 O’Clock News, 23rd July 2010, PTsb Rate Hike

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