Raising finance

In this lesson

1. 0:00 Section three: Raising finance overview
2. 0:05 Fixed rate mortgages explained
3. 0:21 Variable rate mortgages and flexibility
4. 0:44 Tax relief on mortgage interest
5. 1:09 Credit cards and balance transfers
6. 1:31 Bank overdrafts: risks and rates
7. 2:13 Hire purchase agreements

About this lesson

purchase agreements. Understanding when and how to use each method is essential for the FM module and helps you make informed financial decisions in real-world scenarios. The lesson covers long-term financing through mortgages, where fixed rates offer payment certainty and protection against rising interest rates, while variable rates are typically cheaper but unpredictable. You'll see how tax relief applies differently depending on property type: commercial properties and furnished holiday lets allow mortgage interest deduction, whereas residential lettings only qualify for a 20% tax reducer on the interest paid. Short and medium-term options are also explored in detail. Credit cards offer flexibility but come with high interest rates, though interest-free balance transfers can provide temporary relief. Bank overdrafts are cheaper than credit cards but riskier, since they're technically repayable on demand—a critical point many people overlook when treating them as long-term solutions. Finally, hire purchase gives you the option to buy assets on credit over a fixed period, usually with variable interest rates. By the end of this lesson, you'll understand the cost, flexibility, and risk profile of each financing method, helping you advise on or choose the most appropriate option for different financial situations.

Duration: 3m