What Are The Different Types of Loans?

GOGOPROP
Property Guides
April 3, 2025

A loan is a financial arrangement in which a lender provides funds to a borrower with the understanding that the amount will be repaid, usually with interest, over a specified period. Loans are widely used to fund significant purchases, investments, or financial emergencies.

In the UK, loans are classified based on their purpose, repayment structure, and eligibility criteria. They cater to a range of financial needs, such as buying property, consolidating debt, or financing a major life event.

6 Different Types of Loans

The UK offers a variety of loan types. Here is an overview of the most common options:

1. Secured Loans

Secured loans are backed by collateral, such as property, vehicles, or other valuable assets. This collateral reduces the lender’s risk and often results in lower interest rates. Examples of secured loans include mortgage loans for purchasing property and equity release loans, which leverage the value of existing properties. 

Secured loans work best for individuals or investors with valuable assets seeking larger loan amounts or lower rates.

2. Unsecured Loans

Unsecured loans do not require collateral. Instead, they rely on the borrower’s credit history and income for approval. This loan type is best for borrowers with strong credit who need flexibility without risking personal assets.

This type of loan includes personal loans, which are used for various purposes, including home improvement, medical expenses, or weddings. Another example is a debt consolidation loan designed to combine multiple debts into a single repayment. 

3. Buy-to-Let Loans

These loans are designed for purchasing properties intended for rental. They often have higher deposit requirements and are typically interest-only. The rental income should typically cover 125%-145% of the monthly interest payments for buy-to-let loans. This type of loan is tailored for investors building or expanding rental portfolios and is ideally suited for overseas buyers or investors exploring UK property markets.

4. Bridging Loans

Bridging loans are short-term loans that provide quick access to funds, often for property purchases, before a permanent mortgage is secured. They usually have higher interest rates due to the loan’s short-term nature. Investors looking to secure a property quickly in competitive markets can consider this loan type while arranging long-term financing.

5. Asset-Based Loans

Asset-based loans are a type of secured loan where approval is based on the asset’s value rather than the borrower’s credit history. The loan is secured against the value of a borrower’s property or other tangible assets, making it an accessible option for non-residents and overseas buyers who need financing for UK property investments.

6. Business Loans

Business loans are designed for entrepreneurs and companies to fund operational costs, expansions, or specific business-related projects. There are start-up loans for new businesses and working capital loans to cover day-to-day expenses.

Choosing the Right Loan Type

Selecting the right loan type depends on your financial goals, eligibility, and repayment capacity. Consider the following:

A couple discussing the types of personal loans

Purpose of the Loan

Consider the reason for the loan. Are you purchasing property, consolidating debt, or funding a personal need? For property purchases, secured loans or buy-to-let mortgages may be ideal.

Repayment Terms

Short-term loans, like bridging loans, might suit your immediate needs but come with higher interest rates. Meanwhile, long-term loans, like mortgages, offer stable and lower monthly payments.

Eligibility

Find out the loan requirements and assess your credit history and income documentation. For overseas buyers who lack UK credit, asset-based loans from GOGOPROP are a practical option.

Rates and Fees

Compare rates and check for hidden fees, such as prepayment penalties or administrative charges.

Security and Transparency

Consider the loan application process, its transparency, and whether the lender can deliver what you need within the required time frame. 

GOGOPROP Loan Services

GOGOPROP is a digital lender that offers an innovative approach to UK property financing, addressing the unique needs of international buyers looking to finance their investments. We offer two asset-based loan options: buy-to-let and equity release, which you can apply for entirely online. 

With our digital-first platform, we provide fast approvals within 24 hours, loan processing within 5 days, and funding in as little as 10 days. With our client-centred approach, we provide personalised support and expert guidance to help our clients navigate UK property financing. Contact us today for advice on which loan type is best for you.

GOGOPROP

When our family bought an electric cargo bike earlier this year, one of my biggest fears was that this lovely and expensive new machine was going to get stolen. So I got the best lock money could buy, and I started to investigate: did I need ebike insurance?

First, I called my homeowners insurance provider to see if they would cover the bike if it were stolen. To my surprise, because it’s an electric bike, not only did my policy not cover it, they wouldn’t even add it for an additional fee or sell me a separate policy for it, the way they did for our family car.

Instead they referred me to an insurance company that specializes in bikes and ebikes. I bought a policy from them and sleep a little better for it.

I’ve heard similar stories from other ebike owners. And I’ve heard worse.

What can happen without ebike insurance

The saddest stories are the ones where someone assumed their homeowners or renters or car insurance covered their ebike, and after it was stolen or seriously damaged, it turned out it wasn’t covered.

"And then there are the stories about people whose ebikes were covered by their homeowners policy, but their premium went way up when they made a claim for a stolen ebike."
<span class="blog-quote-name">-Kyle Miller, CEO Brass Hands</span>

Why it’s hard to insure an ebike

When it comes to insurance, ebikes land in a gray area outside standard homeowners insurance and auto insurance. Here’s why:

  • Ebikes are new in terms of the insurance industry. Most of the several million ebikes in the U.S. were purchased in the last two years. Insurers aren’t familiar with them, and insurers don’t like to be surprised by unfamiliar products.
  • Ebikes are more expensive than regular bikes. Policies that cover bikes, like most homeowners or renters policies, might have also covered ebikes until the insurer had to pay much larger claims than they expected to replace a damaged or stolen ebike. See above about insurers and surprise. So some policy terms got changed.
  • Finally, ebikes get stolen a lot, and not only from people’s homes. They are ridden and locked up outside all over the place, which makes them more vulnerable than other valuable household items.

Steps to take to properly insure your ebike

The odds that your ebike is covered by your existing insurance is lower than you may think. Here’s what to do to find out if you need ebike insurance:

  1. Call your insurance company and find out what they cover. Things to bring up: coverage of accidental damage, theft, and travel (like what would happen if you flew somewhere with your bike and the airline did a number on it). Does the insurance company consider your ebike a “luxury item”? If you’re happy with the coverage, great! You’re good to go.
  2. Consider bike-specific coverage. If you aren’t covered, or feel like the coverage you do have isn’t enough, here are some things to think about.

Bike insurance covers all kinds of bike specific things, not just theft. Think damage to the bike from a collision, medical payments if you are injured in a collision, insurance for the bike if you are traveling with it or racing it, or a bike rental while your bike is being repaired. Some policies even cover things like accessories (like bike lights and panniers) and riding clothes.

Bike claims won’t affect your other insurance premium. Should you need to make a claim on your ebike, your home insurance premium won’t change or get canceled.

We can help

Want to learn more about ebike insurance? Join Tempo and get easy access to insurance quotes, and other ways to protect your ebike right inside the app.

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