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Understanding UK loans Secured loans FIRSTPLUS Homeowner Loans Personal loans Mortgage loans Remortgage loans Car loans Debt consolidation loans
There are many types of loans available in the UK. You may choose to use different loans at different times for different purposes. The following list, although not definitive, may help you decide which kind of loan is right for you now.
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A secured loan is a loan that uses an asset as security against non-payment. Property is the asset most often used as security for the loan. For example, a FIRSTPLUS Homeowner Loan is a loan secured against the equity, which is the money, tied up in your property. It's especially important to remember that with this kind of loan, if you do not keep up your repayments, your home could be at risk.
As the name suggests, A FIRSTPLUS Homeowner Loan is designed for people who own their own home and have an existing mortgage. It is also called a secured loan because the loan is secured on the equity, which is the money, tied up in your property.
A home loan could give you the flexibility to borrow more and to repay over a longer term†. For example, with a FIRSTPLUS home loan you can borrow any amount between £5,000 and £100,000 at a relatively low interest rate - typical 8.5% APR variable. You can choose a repayment term of between 5 and 25 years and this can make your monthly repayments more affordable.
The most popular form of unsecured loan is called a Personal Loan. There are very few restrictions on how you can use a Personal Loan and people often use them to fund things like holidays, renovations, weddings or a new car.
Because this type of loan is unsecured, borrowing limits and repayment periods tend to be lower than for secured loans. You can usually borrow from as little as £500 but the upper borrowing limits rarely exceed £25,000. The repayment period will usually be between 12 months and 10 years, depending on how much you borrow.
Most banks and building societies offer Personal Loans so it's worth shopping around for the best rate. However, the rate you’re offered will depend on your personal circumstances - typically the better your credit history, the better your credit rating and consequently the lower the interest rate will be that your lender is likely to offer you.
Many banks and building societies offer mortgage loans. These have a single purpose, which is to purchase a house or other type of property. There are many kinds of mortgage loans available. Here are just a few:
Variable Rate mortgage loan - The interest rate for the mortgage loan will vary, it will go up and down in line with the Bank of England base rate.
Fixed Rate mortgage loan - This guarantees your interest rate will stay the same for the period of the fixed rate you choose - usually from 1-5 years.
Tracker mortgage loan - The mortgage loan simply tracks the ups and downs of the base rate.
Discount mortgage loan - A discount rate mortgage loan guarantees borrowers a discounted rate of interest compared to the Bank of England base rate or the variable rate of the lender.
Remortgage simply means changing your mortgage deal and/or your mortgage lender, without moving home.
With a remortgage loan you can potentially reduce your monthly repayments by taking out a new mortgage loan with a different lender or renegotiating your existing mortgage with your current lender.
A car loan is a loan aimed specifically at car purchase. There are lots available and they include both secured and unsecured borrowing.
If you make many payments every month on a variety of loans, credit cards or store cards you can choose to simplify your financial arrangements with a debt consolidation loan. With a debt consolidation loan all your debts are in one place. The new lender pays off the debts you owe to other lenders and transfers them to your debt consolidation loan. This means instead of having lots of bills each month you have a single, manageable amount to pay.
A FIRSTPLUS Homeowner Loan can be used for debt consolidation. It allows you to borrow enough money to pay off your other debts at a relatively low interest rate - typical 8.5% APR variable. It also offers you a flexible choice of repayment period, which can make your monthly payments more affordable.
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