• Home equity loans – are taken out on basis if the equity left in your home. You can very simply calculate it: say your home’s value on the market is £200,000, while you still owe towards the mortgage a £130,000. This makes the equity in your home set at £70,000. Now, depending on the lender, you may be eligible to receive 70-80 or even 90% LTV. It is advisable that you seek financing only with very well established and trustworthy institutions.


• HELOC on the other hand, is similar to a simple home equity loan, but here you will not receive one lump sum, but instead there will be a line of credit where you can access money at your discretion up to the limit.

So, if you need urgent cash in the form of one lump sum, in order to make important purchases like another property, a car, paying off expensive tuition fees, then you should settle for a home equity loan. While if you would need some extra income every month, then you should choose the HELOC financing.

A very important note is that if you cannot manage on your own seeking the financing option you need, you should definitely turn to a professional advisor. The last thing you need is to enter a bad contractual agreement which requires you paying exaggeratedly high interest, arrangement fees, penalty fees and other. The market has lots of offers, so take your time.

Never mix up business with personal life: there are both business and personal loans available. It is a mistake to contract a home equity loan in order to start a new business. That may have you paying for long years, especially if you make the wrong investment. Imagine yourself taking up £30,000 in order to invest in the unknown, but which will have you paying for 15 years That’s why the business loans are for, because most of the times these are unsecured, so there are other criteria which need to be fulfilled.

Always read carefully over and over again the terms and conditions applicable for each type of financing. There might be hidden fees or exaggeratedly high penalty fees both if you are late and if you pay back the borrowed amount earlier.

Bridging loans, as their very name suggests are a solution only to take you over the bridge, to fill in a gap. Unless your reasons are very well founded, and responsibly thought over, you don’t need one. However if you have to choose between an open bridge and the closed bridging loan, choose the second one. It is more secure, as it requires exchange of contracts to take place before you close the deal. This means you have the security that at the set date you can reimburse the money.

Among the worst loan types, one could enumerate:

• Open bridging – high interest, high originating fees (even 2,3% of the LTV)


• Almost all loans for bad credit or no credit scoring (all bear high interest and other charges).


• Sub-prime – despite their good sounding nature, these hide a great possibility of quickly going towards foreclosure


• Interest only loans – are convenient only up until you are actually paying only the interest (3, 5 years), but afterward comes the real hassle.


• Among unsecured loans: the credit card. Credit card industry is flourishing, but not to your best interest always. What you must check when contracting a line of credit and implicitly use the credit card, is the interest rate. Usually it is the interest rate payments that eat up most of your income in most types of loans. So if you can do it, stay away as much as you can from constant use of credit cards, because think of it, that using cash doesn’t make you pay no interest at all. If you can’t stay away, at least contract one on good terms.