MCOB 10A.1 1Calculation of the APRC

The APRC must be calculated for an MCD regulated mortgage contract in accordance with the mathematical formula in MCOB 10A.2.2 R.

Whenever the opening or maintaining of an account is obligatory to obtain the credit, or to obtain it on the terms and conditions marketed, the total cost of credit to the consumer must include the following costs:

1. (1)

   opening and maintaining a specific account;

2. (2)

   using a means of payment for both transactions and drawdowns on that account;

3. (3)

   other costs relating to payment transactions;

The calculation of the APRC must be based on the assumption that the MCD regulated mortgage contract is to remain valid for the period agreed and that the MCD mortgage lender and the consumer will fulfil their obligations under the terms and by the dates specified in the MCD regulated mortgage contract.

If an MCD regulated mortgage contract allows variations in the:

1. (1)

   borrowing rate; or

2. (2)

   charges contained in the APRC;

and they are unquantifiable at the time the APRC is calculated, the APRC must be calculated on the assumption that the borrowing rate and other charges will remain fixed in relation to the level set when the contract is entered into.

If an MCD regulated mortgage contract contains a fixed borrowing rate in relation to the initial period of at least five years, at the end of which a negotiation on the borrowing rate must take place to agree on a new fixed rate for a further material period, the calculation of the additional, illustrative APRC disclosed in the ESIS must:

1. (1)

   cover only the initial fixed-rate period; and

2. (2)

   be based on the assumption that, at the end of the fixed borrowing rate period, the capital outstanding is repaid.

If an MCD regulated mortgage contract:

1. (1)

   allows for variations in the borrowing rate; and

2. (2)

   it does not fall within MCOB 10A.1.5 R,

the ESIS must contain an additional APRC which illustrates the possible risks linked to a significant increase in the borrowing rate. Where the borrowing rate is not capped, this information must be accompanied by a warning highlighting that the total cost of the credit to the consumer, shown by the APRC, may change.

The assumptions in MCOB 10A.2 and, where applicable, in MCOB 10A.3 must be used and applied in calculating the APRC.