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House Loan Interest: Which is better fixed or Floating rate?

Author: Priya Shelar
by Priya Shelar
Posted: Apr 20, 2018

In India, the interest rates offered for housing loans vary from lender to lender. The normal house loan interest rates are from 8.5 to 14% of which HDFC, SBI, ICICI, LIC are front-runners. Most banks and private firms give a privilege to its women borrowers. It encourages women to lend their valuable contribution in buying their own house.

There are various platforms for you online to compare the house loan interest offered by leading and reputed lenders across India. Other than this, when you're totally confused on the loan eligibility, interest rates applicable and monthly installment you can visit the home loan EMI calculator page on the website and get the exact quote by just entering some particulars. The calculation will let you decide the loan amount, interest rates so that you stay prepared in the near future.

Ideally, there are two types of interest rate fixed and floating, however, some companies or banks offer semi-fixed interest rates as well

Fixed house loan interests are uniform through a set period of time for around 15-20 years. The benefits of fixed rates are you know how much you have to set aside every month and you're a shielded from any major fluctuations from the interest rate during the term. The downside is they aren't less flexible when it comes to making one-off or extra payments. Floating rates are subject to market change, so your loan payments will increase or decrease at any time. They offer you greater flexibility to repay some or entire part of your loan at any point of time, without being charged extra fees. A split loan is a mix of both floating as well as fixed house loan interest rates.

Floating rate loans have gained immense popularity in the past couple of years. Experts say the interest rates are further expected to dip in next few years, making floating interest rate favorable for a short-term loan

Always take a dip look at your budget and see whether you have room to face any interest rate increase. Basically, you have to be prepared for an upsurge in the rates. What risk appetite you have and you should consider the impact on other financial commitments or lifestyle needs as well such as family holidays, after work parties, etc.

A piece of advice: If you are investing in property for a long term you can consider fixed interest rate for a longer period of time. If your plans are to sell the property soon in near future you can opt for short fixed interest rates or floating interest that can offer you more flexibility later on.

Both fixed and floating interest rates will have their pros and cons. Experts will only suggest but it's you who have to make the choice based on your income source, risk appetite and prior financial commitments for making a suitable repayment. You must always compare the house loan interest offered across lenders to choose the rates that's right for your individual needs.
About the Author

Priya Shelar is a finance student who loves to write during her spare time. She has considerable information about the home loan emi calculator.Through her work, she has provided valuable information about smart borrowing when it comes to this loan.

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Author: Priya Shelar

Priya Shelar

Member since: Mar 19, 2018
Published articles: 3

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