If you just migrated to the UK, or you have been living in the UK for less than 10 years, and you are wondering how to access loans even though you are not a citizen, this post is for you. Obtaining loans as an immigrant to the UK is an easy process once you know what to do, and this post details just how to go about it.
Loans and grants
Loans and grants are not the same. While one is naturally refundable, the latter can be given freely to deserving individuals or groups that meet specific criteria. One of the first things you should know as an immigrant to the UK is that there are numerous avenues to obtain grants from the government. As a means to achieve social equality in the state, the UK government has made it possible for immigrants (and minorities) to access small business grants which would aid them to create small businesses and provide jobs for themselves. As an immigrant, applying for a grant from the government is a great way to get what you want without having to pay as much in loan interests, and it should be the first step before applying for a loan.
However, if you intend to use the money for purposes other than to start a small business, then the best bet is to apply for a loan.
Types of Loans in the UK
Loans in the UK vary in different ways, but mostly along the line of their payment scheme or the determination of the interest rate. It is important that as an immigrant, you know the different types of loans offered in the UK so as to be sure of which to take. The following are some of the types of loans offered in the UK:
Fixed Interest rate: This kind of loan comes along with a fixed interest rate on the principal. This kind of loan can be beneficial to a borrower when the interest rate is expected to climb; fixing the rate for a particular period saves up much needed money.
Standard variable rate: As the name implies, this kind of loan is based on a variable rate. The Standard variable rate complies with the standards set by the Bank of England Base Rate and taking this type of loan can save a borrower during times when the interest rates are low, but it can also prove as a demerit at times when the interest rates are high.
Tracker rate: similar to the standard variable rate kind of loans, these loans are dependent largely on a tracker rate which is similar to the Bank of England base rate, but is influenced largely by the lending bank’s own private earnings and rates. Taking a loan set on tracker rate can be beneficial because it follows Bank of England base rate, but it is mostly beneficial to the lending bank.
Discounted interest rates: these loans are usually offered to long term clients. In some financial institutions, during the Discounted interest rates loan scheme, the discounts are offered on a tiered basis; that is, the more the client borrows, the greater the discount. In some other institutions, the discounts only apply during a precise period of time, after which the rates revert to the standard variable rates.
What loans are available for immigrants?
The following are the loans available for immigrants:
Offshore residential mortgage
These loans mentioned above can then be serviced using the standard variable rates, the fixed interest rates, etc. depending on the lender or credit facility.