Types of Loan

Mortgages
The main type of loan that people have to take out is a mortgage. This is a loan that enables the borrower to buy a house that is within their means. The amount of money that can be borrowed on a mortgage is based on the earnings of the person or couple who are wanting to buy the house. Generally due to the high value of the loan, the repayments are based on repaying the loan over a period of 25 years. Mortgage repayments can be based on paying off the loan plus the interest charged, or where the interest alone is paid off. With the interest only repayment plan there must be another means to pay off the initial value of the loan when the term expires. The most common way to accrue a large sum of money in 25 years is to start an endowment policy where money paid into an endowment is invested by the financial institutions with the aim to generate more money in years to come. Due to the value required to buy a house and the length of the repaytment term, mortgages generally are offered by the large financial institutions.

Car Loan
If you are planning on buying a new car the easiest way is to finance the car with a car loan. The amount that can be offered by a finance company will depend on your earnings and also your ability to pay the monthly repayments. Often when buying a new car from a garage they will often try to offer you finance through their preferred financer, but often it is cheaper to shop around and find yourself a better deal. Car loans tend to be a short term loan up to 5 years.

Home Improvement Loans
Many people want to decorate their home or may need to install a new kitchen or bathroom which can be costly. Rather than saving up to get the required amount of money the easiest way is to take out a loan and repay it over a period of years. A home improvement loan will again depend on your personal financial status, and loans are offered up to £25,000.

Personal Loan
If you are just needing some money for personal reasons, such as a family holiday, a new television or maybe you need to buy some Christmas presents, then a personal loan would be ideal. It will be a short term repayment term, maybe up to 5 years and varying rates of interest being levied.

Student Loan
Higher education is becoming more expensive as the Government has reduced the amount given to young people in the form of grants and benefits. Tuition fees are also a cost that needs to be covered that did used to be paid for. There is more demand for large amounts of money to be loaned to students with long repayment terms and may also include a salary band that has to be reached before repayments are expected.