Fixed or Floating Interest Rate!Which is Ideal for your Home Loan
Getting a home loan is relatively easier in the current scenario but you still have to choose the type of home loan interest rate that you want. Choosing between fixed and floating interest rates can be confusing for applicants. The choice is a vital one since the interest rates directly affect the EMIs that you will have to pay every month.
A comparison between fixed and floating interest rates has to be undertaken. In case of fixed home loan interest rates, the interest remains absolutely unchanged/fixed throughout the entire loan tenor. Your EMIs will not change in spite of any interest rate changes due to market fluctuations. In case of floating interest rates on home loans, these keep on changing throughout the loan tenor on account of changes in market rates.
When you talk of risks, opting for a fixed interest rate puts the lender at risk in terms of market rates going upwards. However, in case of floating rate loans, the borrower has to directly bear the risk of any upward movement in interest rates. In the similar vein, the borrower also profits when the interest rates go down.
In case you choose a fixed rate of interest on your home loan, you can convert to a floating interest rate by paying a nominal processing fee to the lender. You should always take a well informed decision when it comes to choosing between fixed and floating interest rates for your home loan. Bajaj Finserv offers home loans up to Rs.3crore at attractive rates of interest along with offering benefits like a 3 EMI Holiday, approval within 5 minutes, zero foreclosure and prepayment charges and balance transfer facilities with top-up loan provisions.