Personal loans jargon buster - Tiscali

A loan secured against the value of your home. Secured means that if you fail to pay off the mortgage as agreed, the home can be seized by the lender and sold to repay the debt. There are two broad types of mortgage:repayment mortgage. Your monthly payments cover both the interest and capital repayments, so that, by the end of the term, the loan is completely repaid. interest-only mortgage. Your monthly payments cover only the interest. At the end of the term, the capital is still outstanding and you need some other arrangement for repaying it, for example, from the proceeds of an endowment policy, a personal equity plan, a pension or even sale of the property. There are many different mortgage variations, for example, variable rate where the interest charged moves in line with interest rates generally in the economy, fixed rate whereby the interest is set at one level for a specified period, and so on.

Overdrafts:

An overdraft enables you to withdraw more money than there is in your bank account. It is commonly called: "going into the red". You will usually have to pay interest on the overdraft. But some banks allow you to arrange an interest-free overdraft. This is probably the simplist form of borrowing.

Personal loans:

This is money you borrow from a lender such as a bank or building society to pay for purchases - or to pay off debt. Usually it is paid to you as one lump sum and you make regular repayments.

Student loans:

A low-interest loan from The Student Loan Company to pay for your time at University. You will need to pay this back once you are working. Find out more about student loans.