Disadvantages of APR
The APR is based on an assumption that you will have the same mortgage for the whole of the term, approximately 25 years. However, figures show that people are changing mortgages every 5 – 6 years, and if you plan to change your mortgage after a short period of time, then the APR is likely to give you a false picture.
Take this as an example. Mortgage 1 has a low fixed rate for 4 years, but reverts to the lenders standard rate that is one of a range of higher rates on the market. Mortgage 2 has a higher fixed rate for 4 years, but reverts to a lower standard rate afterwards. Mortgage 1 would have the higher APRs, but if you wanted the mortgage for the 4 year fixed rate, it would be better to go with this.