iBGP update-source loopback/next-hop-self

[reetesh]

I've a small confusing regarding the following configuration on iBGP router

update-source loopback

next-hop-self

If i'm configuring iBGP neighbor using loopback interfaces i would normally add the

command neighbor x.x.x.x update-source loopback 0 to specify the source address of the packets

Now when advertising an external route (from an eBGP neighbor) to an iBGP neighbor i need to configure

neighbor x.x.x.x next-hop-self. 

i just want to know if the next-hop-self command means the exit interface on my iBGP router or the loopback address.

Thank you

[MHM Cisco World]

update-source loopback
this use between eBGP and also between iBGP
this in eBGP effect 
A- the IP of BGP TCP packet between two peer to be use loopback 
B- the next-hop of any prefix advertise will be this loopback 
this in iBGP effect 
the IP of BGP TCP packet between two peer to be use loopback 

next-hop-self
this use only between iBGP
the next-hop of any fix advertise will be this loopback 
it not effect the IP of BGP TCP packet between two peer