What doesn't the APR include?

1. The APR does not include the cost of insurance that a lender may insist you take out in order to get the deal you want. The only exception to this rule is that it does include the cost of any compulsory mortgage payment protection insurance.

2. The APR does not tell you anything about early redemption charges, (ERC), which you will be charged if you repay your mortgage before the term is up. Before you make any decisions based on this feature, think about whether it would be worth paying a little more for your mortgage each month if it means fewer or no ERC’s, as you will have the option of switching deals more cheaply.

3. The APR calculation must make a decision as to what the variable rate will be during and after the ‘special deal’ or discounted rate. It makes the assumption that it is the same as the lenders current variable rate and that it does not fluctuate, but realistically this is not always the case.

4. APR’s such as those in adverts and product literature do not have a legal requirement to include the mortgage indemnity guarantee fee, so be careful.