We investigated the reported distances of Galactic black hole (BH) and neutron star low-mass X-ray binaries (LMXBs). Comparing the distances derived for the neutron stars Cyg X–2 and XTE J2123–058 using the observed Eddington limited photospheric radius expansion bursts with the distances derived using the observed radius and effective temperature of the companion star, we find that the latter are smaller by approximately a factor of 1.5–2. The latter method is often employed to determine the distance to BH LMXBs. A possible explanation for this discrepancy is that the stellar absorption lines in fast rotating companion stars are different from those in the slowly rotating template stars as was found before for early-type stars. This could lead to a systematic mis-classification of the spectral type of the companion star, which in turn would yield a systematic error in the distance. Further, we derive a distance of 4.0+2.0−1.2 kpc for V404 Cyg, using parameters available in the literature. The interstellar extinction seems to have been overestimated for XTE J1550–564 and possibly for two other BH sources (H 1705–25 and GS 2000+25) as well. As a result of this, the distance to XTE J1550–564 may have been underestimated by as much as a factor three. We find that, using the new distances for XTE J1550–564 and V404 Cyg, the maximum outburst luminosity for at least five, but perhaps even seven, of the 15 BH soft X-ray transients exceed the Eddington luminosity for a 10-M⊙ BH – showing that these systems would be classified as ultra-luminous X-ray sources had we observed them in other Galaxies. This renders support for the idea that many ultra-luminous X-ray sources are stellar-mass rather than intermediate-mass BHs. We find that the rms-value of the distance to the Galactic plane for BHs is consistent with that of neutron star LMXBs. This suggests that BHs could also receive a kick-velocity during their formation, although this has to be investigated in more detail. We find that the Galactic neutron star and BH l- and b-distributions are consistent with being the same. The neutron star and BH distribution is asymmetric in l with an excess of systems between −30° < l < 0° over systems with 0° < l < 30°.