What is an interest rate?

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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.

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