08:58 19 December 2013
If you are looking to borrow money for the long term, then this article will come in handy. Long-term financing is one of the things that you cannot run away from. The following article highlights briefly describes what you need to know about mortgages and payday loans, which are the most common forms of long term and short term financing in the United Kingdom respectively.
Mortgages allow one to borrow an amount equivalent to the value of the house. It used to be easy to borrow the exact amount of the house’s value. However, when the credit crunch hit, banks tightened the amount they allowed you to borrow. On the brighter side, this method still allows you borrow money for the longest period. Some mortgages can allow you to borrow for as long as four decades. Do not get it confused with an unsecured loan - if you cannot meet your payments on time, the bank can take back your home with no remorse. Hence, it is for this reason that you should exercise caution when you are borrowing using this method.
This method can be described as the cheapest way to borrow money when compared to other methods available. Considering that there are various options out there, you should know that if you are borrowing for a very long period spanning a couple of decades you will have to pay double the amount.
To mitigate this cost you should ensure that you strike a balance between paying it quickly and keeping the monthly payments low.
Payday loans, on the other hand, do not require security and are ideal for short term. The downside of securing this type of loan is that interest rates are really high and if not looked after it is very easy to go way in over your head. These loans are ideal for individuals who want financing for a few days and weeks.
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