If you a homeowner and you need to raise finance, your first port of call should be to look to release equity from your property. A remortgage is a relatively inexpensive form of borrowing if the value of your property is greater than your current mortgage. In the current climate of low interest rates there are some very competitive deals on offer. We recommend that you obtain independent advice.
There are basically two types of personal loan.
(a) An Unsecured Loan is where the lender does not require any security for the credit they provide, and your application will be judged on the details provided in your application and information held by the Credit Reference Agency. The unsecured loan market is very competitive and it pays to shop around.
(b) A Secured Loan is where the lender uses an asset (normally your home) as security for providing credit. This type of borrowing can be more cost effective in the long term as you will generally pay a lower interest rate. The drawback compared to an unsecured loan is that it can take longer for your application to be processed.
If you have a good relationship with your bank you may be able to agree an attractive overdraft deal. A number of UK banks in attempt to win new customers are offering free overdraft facilities up to 2,500. This can be a very useful way of borrowing if you only require funds for a short period of time every month.
A credit card can be a good or bad form of borrowing depending on how the credit card is used. If you are good at paying off your balance within the free credit period which varies from company to company then it is an efficient tool. On the other hand by not paying on time you are subject to possible high interest rate charges. Many credit card companies now offer interest free periods of typically six months as well as other incentives such as cash backs depending on how much you spend a month as well as air miles and reward points.
This type of credit is generally to be avoided as the interest rates on offer from department stores and large chains are usually on the high side.