123ArticleOnline Logo
Welcome to 123ArticleOnline.com!

ALL >> Investing---Finance >> View Article

Fixed Vs Floating Housing Loan Interest Rates

By Author: Aishwarya Mahurkar
Total Articles: 291

When applying for a home loan, financial institutions offer loan applicants with two types of housing loan interest rates to choose from, fixed interest rate or a floating interest rate. This decision must be made keeping in mind a variety of factors.


Fixed interest rate


This type of housing loan interest rate means that the interest charged on the principal loan amount remains fixed during the entire period of the loan tenure. Market fluctuations do not affect this type of an interest rate as it remains unchanged. When a borrower with a fixed interest rate is repaying their home loan, the early EMIs mainly pay off the interest charged. The principal loan amount is paid of completely in the final EMIs. This type of housing loan interest rate provides the borrower with sense of security.


Floating interest rate


This type of housing loan interest rate means that the interest charged on the principal changes based on fluctuations in the market. When the borrower opts for a floating interest rate, the benefit he receives is that he can take advantage of low interest rates. When the interest rate on the loan is lower he can pay off a bulk of the loan amount. This makes the repayment of the loan cheaper. This benefit is not available for those who opt for a fixed interest rate.


Drawbacks


The drawbacks of opting for a fixed housing loan interest rate is that it is higher than the interest usually paid by those who opt for floating interest rates. Also, those who opt for this interest rate get none of the benefits available to those who opted for a floating housing loan interest rate. For those who opt for a floating interest rate, the monthly EMIs are uneven which make it difficult to predict and save up for.

Which type of interest rate to choose?


Borrowers who prefer to have a fixed monthly payment. Such individuals will plan in advance and organize their finances to meet their monthly EMIs. It is a completely safe option which provides no risk. A floating interest rate is relatively cheaper for home loan applicants. The constant fluctuations however pose a risk. On the occasions where the interest rate goes higher than that charged as floating rate, it can become costly for the borrower. This type of a housing loan interest rate is ideal for those who don’t mind opting for the risk in hopes to get an affordable loan repayment process.


Based on an individual’s requirements and expectations from their interest rate, they should make a decision. This also requires the individual to conduct a detailed study of housing loan interest rates to make an informed decision.

Author Bio :

The author is a seasonal writer on topics of finance and the home loan sector. Through her writing, she articulates aspects that are important to people availing home loan facility such as housing loan interest rates, documents, eligibility criteria that help to make the best decision.

Total Views: 76Word Count: 492See All articles From Author

Investing / Finance Articles

1. All You Want To Know About An Nro Account
Author: Samantha Kennedy

2. Why You Must Outsource Accounting Services Sans Any Doubt And Fear
Author: Lee Bruce

3. Why Door To Door Loans Had Been So Popular Till Now?
Author: David Brown

4. The Latest Trend In Door To Door Loans.
Author: David Brown

5. The Ultimate Revelation Of Door To Door Loans.
Author: David Brown

6. Growing Your Company With Invoice Factoring Funding
Author: Nova Cash Flow Finance

7. All Eyes On The Following Intraday Cash Strategies
Author: robin scott

8. Choosing Chartered Accountancy Profession With Number Of Possibilities
Author: Austin K Loader

9. Greater Noida Triumphs Over Gurgaon To Invite With The Finest Golfing Luxury Living – The Hemisphere
Author: The Hemisphere

10. Towards Benchmarking- Efforts Made Towards Improving Transport Efficiency
Author: Dylan Munro

11. Tips For Ambitious Property Investors
Author: Charlie

12. Need Of The Hour For Investors - Equity Research Reports
Author: Aastha Kapoor

13. Critical Guidelines For Availing Short Term Loans In United Kingdom
Author: David Brown

14. How Do Banks Benefit From An Asset Reconstruction Company In India?
Author: Nidan Narkhade

15. Long Haul Auto Loan: Understand The Pros And Cons Before Saying Yes
Author: David Brown

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: