• With periods up to 25 years, if you offer your home as collateral you could choose a home equity loan or a home equity line of credit known also as HELOC. Comparing these two options, it can be said that usually a home equity loan is cheaper than a home equity line of credit, because it comes with fixed rates most of the times. A home equity loan usually comes under the form of a one time lump sum payment, while HELOC will be used as any other line of credit. So, you should choose whichever you believe suits best your needs.


• With very short crediting periods (6- 12 months), and in exceptional cases this period can be extended, comes the bridging loan. It is a secured type of loan, which is actually used to cover the gap of time and money between selling your current property and buying the new one. The property is evaluated, and depending on the lender you may receive up to 80% of it market value; this way you can buy the new home, while offering as collateral your current home; when this is sold, it will pay back the loan. There are two types of bridging loans: the open and the closed types, with the difference that a closed type supposes that you have already exchanged contracts and you actually can point to a date in the near future when your loan will be paid back in full. This is why the closed bridging loan is a much better and safer solution and it also comes with better contractual terms than the open type bridging loan.

Any the choice that suits you, you should always correlate many factors whenever you are about to settle for a type of loan. For example, besides comparing the interest rates different institutions offer, you should definitely take into account the overall cost of a loan. It may come with very low interest rates, but then take into account everything from arrangement fees to originating fees to see what the actual cost is. You may be borrowing an amount of say £50,000, but the actual cost may rise up to even £80,000. Then, you should also compare the fees for early redemption; this simply means that if you decide to pay off the loan in 10 instead of 15 years, there will be an early redemption fee you have to pay. The best choice is the loan which allows you this flexibility, and charges no early redemption fees.

The other great category includes the unsecured loans, which are not easy to obtain especially if you do have a bad credit rating. These loans will have you paying very high interest rates, exactly because you present a certain risk for the lender. There are the personal unsecured types which are very sought after on the market, which compared to the notorious payday unsecured loans are a much better option. When you compare offers, have a view of perspective upon them, and do not take in account only your present financial situation, but try to foresee whether financially speaking you are indeed apt for the loan given its contractual terms.