Term and introductory period

There is no restriction on the term or duration of a personal loan, but the longer the term, the smaller the instalments due (assuming the other conditions are the same).

Instalments will be payable throughout the term of the loan. Personal loans usually have a shorter term than mortgages, but this will depend on various factors, including the amount applied for and the intended purpose.

When deciding the term, remember that:

A longer term means smaller instalments (assuming the other conditions are the same) but more total interest.

If you take out a variable interest rate loan, a longer term increases the likelihood that the interest rate will change over the lifetime of the loan.

When taking out your loan you may arrange for an introductory period with smaller instalments. However, remember that:

At the end of an interest-only period the loan principal will be unchanged.

During a repayment holiday the interest will be capitalised (added to the principal), increasing your debt.