Want a low interest loan? There are several ways to borrow money legally, each coming with different typical APRs and each having their own pros and cons. Lets look at these now. Remember this article is intended as guidance only - always seek professional advice if you want to go ahead and borrow.

Student Loans

These are a special type of loan available to those seeking higher education in the United Kingdom. The interest rate is set at the rate of inflation, which essentially means you repay the same amount as you borrowed. You also only repay the loan if you earn over a certain amount each year. However you can only borrow this way if you are studying.

Mortgages

A mortgage is generally the cheapest type of loan available to a homeowner, excluding any loans for educational purposes or other specialist lending. Historically in the UK, going to back a good 20 years to the 1990s, most homeowners can borrow at a rate between 3 and 8% APR. So if you want to borrow at the lowest interest rate, and you are a homeowner, then extending your mortgage should be your first consideration. One thing to be aware of is the length of your mortgage - if its over around 30 years or so, then you are going to end up paying back double what you borrowed in the first place.

Personal Loans

This is the loan available to the widest audience - you must be over 18, a UK resident, in some form of employment, and you do not need to be a homeowner. It is much easier to get approval for a personal loan compared to a mortgage. Rates are typically around 7 to 15% APR for loans between £5000 and £25,000. If you want an even smaller amount than £5k you will find the rate goes up a little, as the lender won’t make much profit off you.

Secured Loans

Like a mortgage, these are secured on your home, and the rates are similar to that of a personal loan. You can borrow up to £100,000 this way. You may lose your home if you cannot afford to repay it, so always consider a personal loan first. Secured loans are usually best if you have a below average credit score.

That short overview should give you a good idea of the types of loan most readily available in the UK. If you really want a loan, make sure you do your research first, and then go and see a whole of market broker, as well as a lender or two, to ensure you get the best deal.

Get a low interest loan from a professional UK broker.

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