How Much Can I Borrow With A Loan?

There are many variables that will determine how much you will be able to borrow. Every loan will be different because of these variables which include, your present personal circumstances, the lenders criteria and how much you wish to borrow.

Your circumstances

There are two types of people that apply for a loan. Tenants paying rent or those still living at home and homeowners who are paying a mortgages . You will need to provide information about how much money you want to borrow and how long you want to borrow the money for. Then you will need to include personal details. If it is a single application these will just be yours, if it is a joint one, then the details will include that of your partner too. You will be asked about your incomings so your wages as well as any other income you may receive. They will also need to know your outgoings. How much you pay per month on rent or your mortgage, what your property is worth if you are a homeowner and what other debts you are currently paying off.

Lenders

Their interest rates vary from applicant to applicant, so if a friend got a loan with an interest rate of 6.8%, it doesn't mean you will be able to get the same. Lenders will look at your credit history to determine your reliability of repaying money from your past history. You have a credit file which lists every loan, credit card, mortgage or bill you have applied for or taken out, as well as any payments you have been late with, missed or defaulted on. They will use this information with your current income and expenditure, essentially they are making sure you have enough disposable income, and will be able to afford the monthly repayments, on whatever money you borrow from them if you are accepted.

How Much Can I Borrow?

Tenants applying for an unsecured loan will not be putting up any collateral to secure it, therefore the amount you can apply for is less than with a secured loan. Loan amounts begin at £1000 up to £50,000 depending on your current and present history.How Much Can I Borrow with an Unsecured Loan? Usually £1,000 to £25,000 but some lenders will offer up to £50,000.

Over How Long?Repayment periods are a minimum of 1 year (12 months) and a maximum of 10 years (120 months).

Homeowners can apply for an unsecured loan, but it could work out cheaper to apply for a homeowner loan also known as a secured loan, as their property is used as security on the money they borrow. Secured loans start at £5000 and can go up to £250,000 providing the equity within the property covers the loan amount.

How Much Can I Borrow with a Secured Loan? Usually £5,000 to £100,000 but some lenders will offer up to £250,000 providing the value of the property covers the amount you want to borrow.

Over How Long?Repayment periods are a minimum of 5 year (60 months) and a maximum of 25 years (300 months), although some lenders may offer 30-40 years too.

As a rule, all lenders should be FSA regulated and thus have a duty to lend responsibly. At the same time, it is also your responsibility to make sure you provide up to date and accurate information and borrow responsibly too. If you are offered more than you asked for, or your monthly repayments work out to be more than you can reasonably afford, do not accept it, as you will only end up in more financial trouble. Once you are in unmanageable debt, it can be hard to dig yourself out.

You can read more about borrowing money on the Financial Services Authority website.