Loan

A loan is money borrowed from a financial institution and repaid with interest. It pulls future income forward so you can buy a home or start a business before you have the cash.

The interest rate is not the only thing to check. Fixed or floating, equal-instalment or equal-principal, early repayment penalties, and the maturity date all matter. The same headline rate can produce very different total interest.

Repayment structure alone changes the maths. Equal instalments keep the monthly payment steady and easy to plan around; equal principal costs more at the start but less in total interest. With room to spare, the second is cheaper.

Whether the size is manageable is judged by repayments against income. A common guideline is keeping them under 30% of monthly income, which leaves room to survive a rate rise or a gap in earnings. Remember that a loan lasts far longer than the moment you take it. A thirty-year mortgage commits three decades of future income, so ask whether you can carry the period before you ask about the amount.