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Fixed Vs. Floating Rate of Interest

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Fixed Vs. Floating Rate of Interest

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  1. Home Loans In India

  2. Fixed Vs. Floating Rate of Interest

  3. Applying for a loan is one of the biggest financial decisions you will make. • A loan impacts various areas of your life and requires careful planning and management of your finances. • Of all the factors considered while applying for a loan, rate of interest is the most carefully considered components in Home Loans In India applications. • After all, it is the cost of borrowing money from a lender.

  4. Floating Rate of Interest The fixed rate of interest, as the name suggests, is the type of interest that remains fixed. • Usually, lending institutes allow the rate of interest to remain fixed for certain duration, post which it turns to floating rate of interest (explained below). • For the duration that the interest rate remains fixed, the borrower can continue to pay according to the contractual (lower) interest rate. • This is the biggest advantage of this type of interest, that the rate remains constant despite the fluctuations in repo rate.

  5. When you compare both the charts, two things stand out: • -The EMI remains constant, year to year, with the fixed rate of interest • -The total amount paid towards the loan is lower with the floating rate of interest. • Thus, while the EMI for floating interest rate varies significantly each year, you do pay lesser amount towards your loan. • But with a fixed rate of interest, you can predict your EMI and manage your monthly finances better. In conclusion, it is advised to carefully assess all the factors before you decide upon a particular type of interest rate. • [Source: http://blog.loanbaba.com/fixed-vs-floating-rate-of-interest/]

  6. Click to know more on Home Loans In India: https://www.hdfc.com/housing-loans/home-loans/for-new-homes-salaried Thank You…

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