Recent years have brought about significant diversification of the UK lending market. Both in private and business borrowing arenas alike, there’s a more diverse and accessible assortment of products than ever before.
As each loan type has its advantages, disadvantages, and recommended applications, it’s important to consider all options carefully. Various lending products are readily available to the public, but it pays to know which type of loan best suits your needs.
Detailed below, you’ll find six of the most popular types of loans currently available to the UK public:
Table of Contents
Unsecured Loans
Often referred to simply as personal loans, an unsecured loan can be accessed without the provision of collateral. In order to qualify for an unsecured loan, the applicant will be required to undergo an extensive credit check and provide proof of their financial status.
Due to the lack of security, unsecured loans are sometimes considered higher-risk loans and attach higher overall borrowing costs. Comparing loan providers is essential to access the best possible deal.
Secured Loans
With secured loans, the value of the loan and all applicable borrowing costs are covered by the collateral provided by the borrower.
In a typical example, the applicant may use their home (or other assets) as security for the loan, being offered a maximum of say 75% or 80% of its value. Application processes for secured loans are fast and simpler, with competitive interest rates available. Always compare the market in full to find the most competitive deal on a secured loan.
Bridging Loans
A bridging loan provides quick and convenient access to funding for time-critical purchases and expenses. Similar to a traditional secured loan, bridging loans are almost always secured on the applicant’s existing property. The difference is that a bridging loan can typically be accessed within a matter of days, with the full balance to be repaid in one lump sum after a few weeks or months.
Read also: How to Reinstate the Status of Your Suspended Amazon Account?
Short-term secured loans often attach unbeatable rates of interest and lower borrowing costs. Consider all UK bridging loan specialists before submitting your application.
Development Finance
Designed to provide funding for new property developments, building renovations, repurposing, and so on, development finance is another specialist type of secured loan. Development finance is typically only available for more advanced and extensive funding requirements (minimum loan value £250,000), providing borrowers with the opportunity to borrow around 75% of the total project costs.
These types of loans act as the finance needed for property development purposes and can be repaid over the short- or long-term as preferred.
Equity Release
Homeowners interested in tapping into some (or all) of the cash tied up in their property can consider equity release.
For the most part, equity release is a little like selling your property to a bank or investor for a lump sum cash payment. Depending on the terms of the agreement, you can then continue living in your property by paying a monthly tenancy fee, or for an agreed period of time (usually until the death of the owner) for free. Seek independent advice and brokerage if considering equity release.
Remortgage
A remortgage can be a great way of saving a fortune on your outstanding loan balance. It’s essentially a case of switching to a new mortgage deal or provider, which offers more attractive terms, interest rates, and borrowing costs than your current mortgage. Remortgaging multiple times during the life of your home loan could amass incredible savings.
Just be sure to seek independent advice and compare the market in full, before going ahead.
Comment here