7 Types of loans available in the UK
Loans might just be the leverage you need to achieve your financial goals.
19:37 23 May 2020
People apply for loans due to varying reasons - for capital, to grow their business, or for immediate cash. Regardless of the reason why you're getting a loan, it's essential to know all the types of loans and which one is best suited for your needs. Learn more about the 7 types of loans available in the UK below.
Starting a business requires an adequate amount of capital for startup expenses and expansions. This is why most businesses rely on business loans for financial assistance.
The specific type of business loan to get depends on the current size and stage of your business. Your company must also have a good credit history to easily get your application approved.
If you are planning to borrow a substantial amount of money over an extended term, secured loans might be the best option. These loans are usually much cheaper than the other loans. Some advantages of these loans include easy repayment options, increased borrowing amounts, better availability, and lower interest rates.
Also known as unsecured loans, personal loans are ideal if you want to borrow specific amounts of money and pay it back every month with a fixed amount over a pre-agreed period.
Personal loans may be used for almost any legal purpose subject which is subject to the lender's approval. Some lenders don't provide loans for commercial use.
Mortgage loans are designed to help you purchase land and property. If you don't have the funds, especially if you are a first-time buyer, these loans should be your choice.
Buying a property is a big financial commitment, so the lenders don't expect you to pay it right away. Mortgage loans are paid back over long periods, usually decades.
When it comes to guarantor loans, you and another person both take responsibility for repaying debt. In case you are unable to make repayments, the guarantor must pay it back for you.
These loans are useful if you have a low credit score and your applications are getting turned down on other kinds of loans. It is also essential to choose a guarantor who can support you and understand your situation.
Property development loans
If you are a property developer who needs to fund new, large-scale projects, this might be a good choice. Whether that is a conversion of an existing property, a new development, or a large building renovation, development loans provide the finances needed to accomplish these projects.
The scale of the project determines the financial options you get. Some types of building work include heavy renovations, light refurbishment, and ground-up development.
Bridging loans are ideal if you have gaps in your finances that you need to fill. Let's say you are planning to buy and move into another house. You have found the property you want, but you haven't sold your existing property yet. These loans can help you buy the new property until you sell your existing property.
These loans are also a good choice for property developers, especially those who plan to renovate a property and quickly sell it afterward. Bridging loans may also be used by auction buyers who need more time to put their finances in place.
Loans can provide great financial assistance to anyone. Upmoney provides a free comparison service to help you narrow down the best type of loan for you. They could be the support you need to achieve your financial goals. It would be very helpful to know all the loan types and their purpose to be able to choose one that meets your specific needs.