As the UK makes huge efforts to weather the current credit crisis other factors continue to make the UK’s financial future look bleak at best. If the debacle over sub-prime lending hadn’t done enough damage, the continuous increase in essential items like oil, gas and electricity may spell out even more bad news for the country’s financial future. If individuals are already struggling to make ends meet with their kaleidoscope of cash and credit commitments, any basic cost increases could stretch them beyond their capabilities. What does this mean for Brits, what effect will this have on the various lending rates and is there a silver lining to this ever-darkening grey cloud of costs and consequences?

As it stands, the price of oil has hit record levels and certain host nations to the bulk of the world’s supply are beginning to place embargos and trading limitations to nations such as the UK and USA, such moves contribute to the ever increasing prices as the limitations on supply, make the product more valuable, the tab being picked up by average consumer. Knowing that wage packets aren’t increasing at the same rate as the cost of essential commodities it is an interesting debate as to how consumers will react to this current crisis.

Tim Moss of moneysupermarket.com has commented on the current crisis, stating that “people are really starting to suffer and need help urgently”. What kind of help are people looking to obtain to help them ride this current tide, for some its applying for an increase to their overdraft limit, for others hope comes in the form of a 0% credit card, and for others still, taking out a loan is the answer. Borrowing may be the only option available to many households, taking out a loan, secured or not may buy you some valuable time; hopefully time is all that is needed to bring things back into some form of equilibrium.

On deciding to take out a loan, what are some of the factors to keep in mind, after all you don't want to leap from one financial frying pan straight into the arms of a financial fire. Taking the time to source the best option for you and your family, may mean the difference between your purse strings pinching and their seams bursting. On an unsecured loan you can look to borrow up to £25,000 over a period of usually no longer than ten years, this is good option for those who don't like the thought of putting your house up as collateral against your borrowings. With lenders offering rates as low as 7.2% on an unsecured loan it may be the most cost effective way to organise your finances in such a fashion that leaves you and your household with more each month to comfortably pay for the essentials.

If it is likely to take more than £25,000 to smooth out your financial creases and discrepancies then your hand may be forced into taking out a secured loan, as a homeowner you have two options based on whether you have a mortgage outstanding or not. If your mortgage has been paid in full you can release some of the equity tied up in the building knowing that you will not have to make any monthly payments, rather the loan and its interest is calculated and will be taken from the proceeds after the property has been sold, following your move from the property or your expiration. Although it is technically a loan this option is usually referred to as either a lifetime mortgage or an equity mortgage.

For those that still have payments to make on their mortgage a homeowner loan may be the most viable option to source some extra funds. The benefits of this type of loan are numerous, unlike an unsecured loan the repayment period can span over 30 years, making the monthly payments significantly lower. Another huge benefit is that you can borrow up to 125% of your property’s value.