Personal loans tend to be more significantly more expensive than home loans because they are unsecured (the lender is risking more). It's really not smart paying too much interest, especially if you want to go into business for yourself. The more outgoings, the bigger the stress on you and your business.

You are still pretty young. I suggest you do this step-by-step.

1. Start saving hard and raise a big deposit. The bigger the better, as the more you can put down, the lower the interest rate you can secure. Then look around for a suitable home loan. It goes without saying that you should try to ensure your credit rating is spotless.

2. Once you have purchased your home, then think about the business you want to start. You will need to make a detailed business plan before anyone will lend to you. And open a business account. Always, always, always keep business finance separate from your personal finance. In fact it might be more efficient to set up a limited company to hold your shop - that way, you won't be personally liable if the shop fails.

This is all about limiting risk. You want to pay the lowest amount of interest. You want to ensure that if your business fails you don't lose your home, which means keeping the two separate. I would advise you to google how to set up a business plan, as that should highlight all the things you need to think about before you take the plunge.

P.S. I forgot to add that you should find it easier to get a home loan while still in your current employment, especially as you have a track record of long service.

It becomes much harder to apply for a loan when you become self-employed.

Thanks for your feedback Rose.

What if I was to apply for a much smaller personal loan; say seven thousand? Something to boost my credit and build a relationship with my bank. My property joins my parents (which is where I currently am) so I would be able to keep watch of anything I build on the land. I was thinking use the smaller personal loan to not only jump start the credit but to build a mid size shed (no power, not inclosed) a 30ft by 60ft. Show the bank I am always on time with payments and double up on many payments as well.

Have the loan paid off and save to put down on a home loan. Have the house built and while in between bills and paying the loan off slowly save up the money to eventually close the shed in as well as run power to it and concrete the floor. Does this sound like a good idea or bad? Also what is a good interest rate for a personal? So I have better knowledge of what is on the high side or a good deal.

The shop will not be a full time business per say. I plan on keeping my current job and work out of the shop on weekends and evenings much like a second job. If things work out well and I get enough customers it could become full time but to be safe I had planned on "testing the waters" first. Just in case nothing comes of the shop I still have my steady job. Plus I need the shop for personal use as well so there really won't be any money lost if it does fall through.

Thanks again for your feedback. It is greatly appreciated.

first get a copy of our credit report, then game the system with cards that you use an pay back in the time limit, look into first time buyers mortgage lenders and the government support of such, you may already have what is needed. Avoiding a mortgage makes no sense because with the note the personal lender will insist on he can foreclose on the house, it is actually better to have the loan as a mortgage because when things go south the mortgage lender usually only get the house (depends a bit on the state); when having a business make a plan and incorporate and develop credit as well on the number of the company separate from yours

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scplowboy, I would do what saphirecapital said re the credit rating

1. Apply for your credit report, to see what's on it.

2. Then apply for a credit card, and make a small purchase on it every month, and be sure to pay the entire balance as soon as it is due. That way you build a record but don't build up any debt.

It sounds to me that you own land but want to build a house + a shed on it? Is that correct? I'm pretty sure there are types of mortgages where they lend to allow you to build (you draw down the loan in stages). But you would need to investigate if there are any of them in your state.

I would go down the mortgage route instead of the personal loan route. Mortgage interest rates tend to be a good 2%-5% lower than personal loan rates. No sense throwing away money for nothing. But in order to get the mortgage you need to do the saving part first. It's cheaper to save and then get the mortgage, than to get a personal loan and pay out extra interest which means that your scope for saving is less.

I think you might be in too much of a hurry. Rome wasn't built in a day! What I'm trying to say is that it will take you longer to reach your goal if you go with the personal loan route. Seriously, interest is like a giant rock tied to your ankle. Once you enslave yourself like that it takes twice the effort to achieve anything because you are transferring so much wealth to the bank. Save first, then get a mortgage with the lowest interest you can. Once you have the mortgage overpay it with any spare cash you have if the terms allow it.

Whilst you are saving this year, I would do research on setting up the business. There's loads of pitfalls, as well as tax implications. It might be more tax efficient to set up a separate company to hold your shop, and it's always wise to go for limited liability. If you go into things as fully prepared as possible, you should succeed. Most businesses fail because their owners failed to plan and prepare. They just think their enthusiasm and excitement will carry them through - but it's not enough.

The second job you are mentioning could actually be a negative for your. They creditor might see that as you can't affort the loan without it, and that is the reason you got it.

Rose raises a good point about applying before you are self employed, but
she made me laugh when she said you were still fairly young.

I have underwear older than you.