What is APR (TAEG), and how does it affect my decision?

What is the APR?

It is the measure of what the loan costs you. It shows how much you pay per year, as a percentage of the amount borrowed.

The APR goes beyond the interest rate. The nominal interest rate, or TAN, shows only the cost of interest. The APR adds the other costs of the loan.

The bank must show you both, together with the MTIC. The MTIC is the total you will pay, in euros.

What goes into the APR?

• interest;
• fees and expenses, such as taxes and the registration of the mortgage;
• the insurance required to get the loan;
• the current account maintenance fee, if that account is mandatory for the loan;
• the credit intermediary's fee, if you pay it.

What is left out of the APR?

• amounts due if you break the contract;
• early repayment fees;
• notary costs.

These costs come on top. Ask about them before you decide.

How do I use the APR to compare offers?

Compare offers with the same amount, the same term and the same way of repaying. On that basis, the lowest APR points to the cheapest loan.

Always read the APR next to the MTIC. Banco de Portugal advises comparing both, not only the spread.

An example with the sums

You borrow €150,000 over 30 years. You get two offers.

• Offer A: interest rate of 3%, insurance of €30 a month and €1,000 in fees.
• Offer B: interest rate of 2.9%, insurance of €45 a month and €1,500 in fees.

Offer B has the lower interest rate. But its insurance and fees weigh more.

With these costs and stamp duty, the APR of offer A is about 3.53%. The APR of offer B is about 3.64%. On the APR, offer A is the cheaper one.

The MTIC confirms it: €240,406 for offer A and €243,424 for B. The sums are in the guide What is MTIC, and why is it more important than the Spread?

These are example figures. We worked out the APR with these costs only, with the rate and insurance unchanged for the whole term.

Can the APR change after signing?

The APR is worked out with the information on the day of the offer. With a variable rate, Euribor changes over the life of the loan. The real cost changes with it.

In the mortgage repayment calculator you can see what a different rate does to your repayment.

Where do I find the APR?

It is in part A of the ESIS, the sheet the bank gives you at the calculation and at approval. The MTIC and the nominal rate are there too. See the guide What is the FINE, and why should I read it carefully?

Where FINOVA helps

We take your case to several banks. We compare the offers with you by APR and MTIC, for the same amount and term. Our fee is paid by the bank.

Sources

• Banco de Portugal — What is the APR and what is it for? (in Portuguese)
• Banco de Portugal — Interest rates in home loans
• Banco de Portugal — New rules on mortgage credit (in Portuguese)
• Banco de Portugal — Four tips for comparing home loan offers (in Portuguese)
• Banco de Portugal — How to enter into home loan agreements

Sources checked on 22 September 2026.