What’s better among Fixed, Semi-Fixed or Floating Home Loan? – Here is the Answer!

1. What’s better among Fixed, Semi-Fixed or Floating Home Loan? – Here is the Answer! The preference of a Fixed, floating, or semi-fixed Housing Loan interest rates, depends on factors consisting of the tenure of the Loan, age of the applicant and current market situations. When opting for a Home loan, buyers have a desire between 3 types of choices – Fixed, semi-fixed and floating interest rates. Choosing the right scheme can be a tough decision. Various factors can have an effect on buyers in short and long term, if an incorrect home loan scheme is selected. In a home loan with a fixed rate of interest, the equated month-to-month installments or EMIs will stay regular over the tenure of the loan. It is useful to choose this if interest rates have bottomed out. But, fixed rates are typically higher than floating fees at any given time. On the other hand, for floating interest rate loans, the EMIs might changes as per market’s condition, as per the increase or decrease of interest rates. A Home loan with semi-fixed rate is a blend of fixed and floating fees. The interest rates on such loans continue to be unchanged for a specific period of time, after which, the rate of interest is converted to floating. What suits you better? Experts say that when interest rates were growing, only a few banks and NBFC’s establishments were inclined to offer fixed rate loans. They have been charging at around 2% - 3% higher than the prevailing floating interest rates. However, now those interests rates are on a downturn, banks have cut the margin unfold and are trying to get customers, with fixed and semi-fixed rate loans. A Home Loan seeker need to analyze every aspect before finalizing a Loan and opt for a best choice that fulfills their needs and no longer going to be trapped into random attractive offers that might not be beneficial. Floating Vs Fixed Vs Semi-Fixed fee loan Benefits of Floating Rates If you are choosing floating rates for home loan India then you may avail following benefits:- Suitable for long tenure (i.e. more than 20 years) Opt for this scheme when income flow is adequate to service the rate fluctuation Ideal when the interest rate is expected to fall Suited to loan borrowers who can take risks (for example, borrowers aged 30-35 years) Benefits of Fixed Rates

2. If you are going to get Fixed rates for a home loan then you can have following benefits:- Ideal for short/medium terms Opt for this when the income flow is not expected to grow Ideal when the interest rate is expected to rise Suited to loan borrowers who do not want to take risk(for example, borrower aged 50 years) Benefits of Semi-Fixed Rates If you are going to get Semi-Fixed rates for a home loan then you can have following benefits:- Suitable for medium terms Opt for this scheme when the income flow is not expected to grow Ideal when the interest rate is expected to rise in the short term and then fall Suited to loan borrowers who do not want to take risk These days, banks are offering flexible tenures for loan repayment, for a long period up to 30 years as per their need/eligibility. Some websites and newspapers also provide a comparative analysis of housing loan schemes of numerous banks, factors out R K Gupta, ED, Bank of Maharashtra. Loan seekers can visit the websites of different banks, to get information of housing and other loan products and choose an appropriate bank for this reason, added Mr. Gupta. “The type of interest rate you choose has an impact on the monthly EMIs you pay. It is vital that one ought to understand the difference among fixed fee home Loan and floating rate Home loan,” advises Gupta. Market situations and its referring to interest rate options Several rates have been cut by the RBI, indicating that the market is getting into a time period of low interest rates and the same is probable to fall in addition, in the coming years.

3. After many rate cuts, Reserve Bank of India is now has now targeted its transmission and has been urging banks to pass on the charge cuts to customers, through their lending rates. Consequently, banks might also reduce their fees, which could advantage borrowers of floating rate home loans. Conclusion If you are planning to buy a home then you must know the difference between these different type of interest rates that are application with Home Loans. Apply for Home Loans after clearing your doubts and understanding about home loan interest rates.