Interest Rate

An interest rate refers to a percentage charged on top of the total loan amount you borrow.

For example, if you borrow £100,000 and have an interest rate of 1%, you must pay 1% of that amount over a fixed period. 

You can pay the interest at the end of a loan term, otherwise known as rolled-up interest, or the lender can deduct the interest from the gross loan amount before you receive the funds, known as retained interest.