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Glossary of terms
APR
APR stands for Annualised Percentage Rate of charge. Under Financial Services Authority rules a lender is always required to quote the APR when advertising a loan or borrowing rate. The APR calculates the total amount of interest that will be paid over the entire period of the loan. It must also take into account any charges which the borrower has to pay in order to obtain the loan and during the loan period (such as application fees, valuation and legal fees etc). The purpose of APR is to help you compare the true cost of borrowing.
EURIBOR
EURIBOR is otherwise known as the Euro Inter Bank Offered Rate. It is sponsored by the European Banking Federation as the benchmark rate at which euro interbank term deposits within the eurozone are offered by one prime bank to another prime bank.
EURIBOR changes throughout the day on a deal basis but is fixed once a day (at about midday London time) as a reference rate for loan interest rate fixing for a number of tenor periods (1 month, 3 months etc).
Our overseas mortgages, unless specified differently in individual product terms, are based on this rate.
Although past performance isn't an indication of future performance, EURIBOR interest rates have historically been much lower than those in the UK.
LIBOR
This stands for the London Inter Bank Offered Rate.
It is the interest rate that the banks charge each other for loans in various
currencies borrowed for anywhere from one day to five years.
LIBOR is officially fixed once a day as a reference rate for loan interest
rate fixing for a number of tenor periods (1 month, 3 months etc) by a small
group of large London banks. LIBOR also changes throughout the day on a deal
basis.