Save And Borrow Accounts

Where from? Banks, some finance houses.

How they work You pay a set amount each month into an account and can borrow up to 30 times the monthly payment. You're charged a variable rate of interest on the amount you actually borrow, and some accounts pay you interest when you're in credit. No security is required.

Points to note Interest on overdrawn accounts tends to be high and there may be other charges. Interest when you're in credit is usually lower than you could get on other interest-bearing accounts.

Verdict Convenient, but expensive.

Budget accounts

Where from? Banks, some finance houses.

How they work You add up your expected yearly expenditure and put one-twelfth of the total into the account every month. You then use the account to pay your bills. When you're overdrawn, you pay interest at a variable rate and there may be other charges. You don't get any interest when you're in credit.

Points to note Gas and electricity boards and local authorities run their own schemes for spreading bill payments which generally work out cheaper than using a special budget account. Better still is if you can save regularly in an interest-bearing account and use that to pay the bills ).

Verdict May help you to budget, but expensive compared with other options.

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Bridging Loans

Where from? Banks, building societies.

How they work You borrow to bridge the gap between paying for your new home and getting the money from the sale of your old home. Loans may be 'open-ended' in which case you borrow for an unspecified length of time because you haven't yet exchanged contracts on your old home. More often, the loan will be 'closed' and will cover the fixed period from exchange of contracts to completion of the sale of the old home. Usually bridging loans aren't secured on either property.

Points to note There may be an arrangement fee of, say, one per cent of... see: Bridging Loans

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