If you are looking forward to buying your own house, a home loan can be a great financial aid. Instead of liquidating your entire savings, opting for a home loan is always a better choice. Financial institutions can help you realize your dream of buying your own house by offering easy monthly installments and convenient repayment tenure. However, before you settle for a home loan, ensure that you are well-aware about its intricacies.
One of the key factors while opting for a home loan is the interest rate. Therefore, choosing the right interest rate is crucial to avoid any financial stress during the loan tenure. However, most individuals face a lot of dilemma when it comes to choosing between fixed and floating home loan interest rates. Below is a guide that will help you have a better understanding of fixed and floating interest rates.
Fixed Vs Floating – What to choose?
Both fixed and floating interest rate have their pros and cons and borrowers should make a choice depending upon their convenience. A fixed interest rate on a loan ensures that the equated monthly installments or EMIs remain constant throughout the tenure of the loan. On the contrary, in case of floating interest rates, the EMIs would fluctuate as per the market dynamics, that is, when interest rates increase or decrease.
Fixed interest rates – Advantages & Disadvantages
Home loans come with a long tenure. Opting for a fixed interest rate will provide you a clear idea about your monthly installments. You can have a better understanding of your loan repayment by opting for a fixed interest rate.
On the other hand, it is observed that the fixed-interest-rate loans are anywhere between 1 to 2.5% higher than floating-interest-rate loans depending on the financial institution you opt for. Moreover, most banks offer fixed interest rates for a limited duration, thereby subjecting the borrower to floating market rates once the fixed rate period is over.
Floating interest rates: Advantages & Disadvantages
Floating interest rate won’t be a feasible option if you have a fixed monthly budget, as it does not give a clear idea about the monthly installments. However, floating interest rates have gained popularity in recent times as they are usually lower than fixed interest rates. A lot of financial institutions are now attracting Home Loan applicants using floating interest rates as low as 8.35%.
Leading NBFCs like Finserv Markets, offer a transparent floating interest rate on home loans. Moreover, applying for a home loan with Finserv Markets is a hassle-free process. Minimal documentation, fast and user-friendly online process and flexible repayment options are some of the major benefits of opting for a home loan with Finserv Markets. Additionally, you can also customize your loans so that it suits your needs in the best possible way. Lastly, Under the Pradhan Mantri Awas Yojna, first-time applicants get the added benefit of reduced EMI’s and interest rates.
So what are you waiting for? Take your first step towards purchasing your dream home now.
Finserv Markets, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment, and exclusive EMI store, all under one roof- anytime, anywhere!