Loans are usually available for periods of up to 5 years. Revolving credit account - This is a combined account for borrowing and saving which gives you the automatic right to borrow money. You decide on the amount -- generally between 10 and 120 -- you want to save each month. Whatever figure you choose, you can then borrow up to a given multiple of that amount whenever you like, either in a lump sum or in small irregular amounts. You will pay interest charges. Budget account- This smooths out the highs and lows of paying bills throughout the year. You add up all the bills you know will come in over the next year -- plus a bit more for contingencies -- and divide by twelve.
This is the amount you pay into the account every month. When the bills come in you pay them on the budget account cheque book and don't have to worry whether the money is there or not. You will pay interest when you are in the red, plus a charge for cheques and an annual service fee. Mortgage - The largest amount of money you are ever likely to want to borrow will be to buy a home. Fortunately mortgages tend to be a little cheaper than other loans and you will receive tax relief on the interest you pay, up to a maximum of 30,000, at your highest rate of tax. You can generally borrow up to 90% of the value of the new home, and you can borrow as much as three times you salary: the loan will usually be for a maximum of 25 years.
The choice is between a repayment mortgage which is a straightforward loan, an endowment mortgage which includes life assurance, and a pension mortgage . Bridging loan - You may have to commit yourself to buying a new home before you have sold your existing one, in which case you may need to take out a bridging loan to tide you over until you sell. These are generally expensive so you would only usually take out such a loan if you already know how long the delay will last. How to getT a loan This is quite simple. If you already have an account, you can talk to one of the staff in your branch or see the manager. if you do not have an account, you can still ask about borrowing money, but you will probably be expected to open an account with the bank. The branch staff will give you details of the best loan for your purpose and will tell you exactly how much it will cost you. You will then be asked to fill out a loan application form with information such as your name and address, where you work, your income and outgoings, etc. banks don't always ask you to deposit security or collateral to back a loan: they generally rely on their assessment of your ability to repay.
Whether or not you get a loan depends on many factors including a credit assessment. The details you give are assessed according to a points system and then the bank may check with a credit reference agency to see whether you have a previous record of not paying your debts. If you are turned down, ask the bank whether or not they have used a credit reference agency. If you believe your name may be on such an agency's list, you have the right to see a copy of your file, and to correct any mistakes you may find. You will be charged to do this: it is worth doing before you need to borrow money. Take care - The bank may reject your request for a loan because it thinks you are overcommitting yourself. You must be careful not to borrow more money that you can afford to repay. Before you take out a loan sit down and list all the money coming in and what you will have to pay out.
Then subtract the cost of the loan. Will you be comfortable living on what you have left? If not, do not take out the loan. the bank will not mind, though they may charge you for a management fee. Could you cope with repaying the loan if you were made redundant or lost your overtime earnings or were unable to work because of illness? It may be possible to take out insurance against this. If you get into difficulties repaying the loan, go straight to the lender and explain the problem. They will come to an appropriate arrangement with you. You may be surprised how helpful they can be. It is usually unwise to borrow to pay off another debt.