Are You Buying the Wrong Mortgage? APRC, Reversion Rates and Overall Cost
Author: Andy Bedford » Publish Date: 14 July 2025
The Mortgage Market’s Misleading Buy Signals
Introduction: The Danger of Buying on Fictional Signals
In today’s mortgage market, consumers are regularly bombarded with “headline rates”, slick illustrations, and alluring “best buy” tables. But buried within the details of these offerings lie calculations that can be actively misleading — Annual Percentage Rate of Charge (APRC), reversionary rates, and total cost over term; being the main offenders.
While these metrics were introduced with the aim of transparency, they risk distorting buyer decision-making. Too often, borrowers choose a mortgage product based on hypothetical, long-range assumptions — ignoring the far more practical reality that most borrowers don’t keep the same mortgage for 25 years; and likely shouldn’t. This article explains why it’s time to adopt new benchmarks.
What Are APRC, Reversion Rates, and Overall Cost — and Why Do They Mislead?
APRC (Annual Percentage Rate of Charge)
The APRC is intended to show the annual cost of a mortgage, averaged over the entire term (usually assumed to be 25 years), and including interest, fees, and charges. It’s meant to allow an “apples-to-apples” comparison between different mortgage products.
But this logic breaks down in practice. Most borrowers remortgage every 2 to 5 years. Few — if any — ride out their initial deal only to sit on their lender’s reversion rate for the next 20+ years. So, including that reversionary period in the APRC becomes not just irrelevant, but actively deceptive.
Moreover, by extending the calculation across decades, lenders can make a product look cheaper overall — even if it costs more during the period you’ll actually keep it.
Reversion Rates
The reversion rate is the variable interest rate you fall onto once your initial fixed, tracker, or discount deal expires. The rate is usually the lenders standard variable rate which itself is not formally tied to the Bank of England base rate and is entirely at the lender’s discretion to alter (although a few lenders may offer a reversion rate which is linked to the BOE rate with a significant margin applied).
The issue? Reversion rates can move significantly during the term of your initial deal. A lender whose SVR seems competitive today may be wildly uncompetitive two years from now. As the reversion rate is used in calculating the APRC, then the resulting figure is based on a complete fiction.
It also incentivises bad behaviour — the borrower who doesn’t switch products at the end of their term is effectively penalised, while the product looks better on paper to those who assume they’ll always remortgage. It’s a lose-lose.
Overall Cost Over Term
Mortgage illustrations show the “total cost” of a mortgage over the term, typically 25 or 30 years as well — treating the reversion rate as statis and assuming no changes in behaviour. Again, this assumes the borrower never switches lender, never redeems early, never moves house, and never makes overpayments. This is rarely the case.
And because this figure is calculated using the reversion rate for all years beyond the initial deal, it embeds the same misleading assumptions that plague the APRC.
Why the Reversion Rate Should Be Largely Ignored
For most customers, there is simply never a time to be on a reversion rate in day-to-day trading.
The circumstances where a reversion rate would be competitive are extremely rare. And even for someone who believes they are selling their home and have a new mortgage application in mind; the existing loan could frequently be converted to a deal with no early repayment penalties on a significantly lower rate and redeemed without loss.
If that house sale falls through though, and three months turn into a year, then that switch could save thousands and take a matter of hours to affect.
It’s extremely rare for a reversion rate to compete with new product offerings. So, unless you have such a small balance remaining on your mortgage that large changes in rates amount to differences of a couple of hundred pounds a year, the effort involved in switching is almost always warranted.
And yet: there is no regulatory obligation to advise customers to shop around before their deal ends, but there is an obligation to include outmoded cost indicators that bear little real-world value.
The Right Metric: Cost of the Initial Deal Period
If most borrowers remortgage every 2–5 years, then the most useful comparison metric isn’t the APRC — it’s the effective cost of the initial deal period, taking into account:
- Initial interest rate
- Product fees (including arrangement and valuation costs)
- Cashback or incentives
- Exit charges or early repayment charges (ERCs)
- Legal or broker fees (where applicable)
- Trailing interest (some lenders may lock you into a month of interest at the higher reversion rate at the end of the deal, equivalent to a hidden fee of a few hundred or even thousand pounds depending on loan size).
This provides a far more grounded basis for comparing one deal to another in a meaningful way — i.e., the way most borrowers actually behave.
But even this needs to be done properly. Comparing “costs” based on monthly payments alone ignores the amortisation structure — how your payments are split between interest and capital. A product with a slightly higher rate but lower fees might cost less overall over two years than a low-rate, high-fee option.
Why You Need to Use an Amortisation Calculator
Accurate product comparisons require more than looking at monthly payments or percentage rates. They require amortisation analysis — a breakdown of exactly how your loan is repaid over time.
A mortgage amortisation calculator allows you to:
- Compare total interest paid during the initial deal
- Assess the impact of fees and incentives
- See how early repayment or overpayments affect the cost
- Plan refinancing strategies with real figures, not illustrations
Far too many borrowers simply take a rate and apply it to the loan balance without factoring in fees, repayments, or even time. That’s not enough.
A robust amortisation tool is essential if you want to optimise your borrowing strategy over time — especially if you’re the kind of borrower who proactively manages your debt.
Conclusion: It’s Time to Retire APRC in Favour of Real Cost Comparisons
The APRC and total-cost-over-term metrics served a regulatory purpose. They aimed to force consistency in advertising and encourage disclosure. But they’re now little more than a compliance formality — and in many cases, a dangerous distraction.
The industry — and borrowers — need to focus on real costs, over real horizons, and ensure that product comparisons reflect how people actually manage their mortgages.
Until we replace the APRC with something that captures that reality — ideally, a cost-over-initial-period metric backed by amortisation data — buyers will continue to be lured by the wrong signals, and some will pay thousands more than they needed to.