What is an interest Rate
If you borrow money to purchase a property and the interest rate is 5% a year, it will cost you 5% of the amount borrowed.
For example, if you borrowed £100 with an annual interest rate of 5% you would expect to pay back £105.
If you save money in a savings account with an annual interest rate of 5% a year, you will earn 5% of the money saved annually. Click here for the Government guidance on savings tax.
Interest rates are usually quoted annually, but not always, so make sure you double-check with your lender.