An Overview On Different Types Of Home Loan Interest Rates

By Author: Shreya Eppili
Total Articles: 54
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Owning a house usually offers people a sense of accomplishment. It also ensures stability and security that a rented home cannot provide. Besides, buying a property you can call home is often a cherished life goal for many. However, bringing this dream to life requires considerable effort. Applying for a Home Loan usually becomes an effective way to make this wish manageable financially. However, this Loan is a long-term financial commitment.
Therefore, you need to consider carefully before deciding. An important concern when looking for a Home Loan is its interest rate. Typically, you can choose from two common interest rates. Let us understand more about this Loan and check the types of interest rates you can consider when applying for one.
About Home Loans
A Housing Loan is a financial product. Several banks in India offer this financial assistance. It is a Secured Loan, and you can use it to buy a property by providing it as collateral. When you opt for this Loan, you need to repay it as equated monthly instalments. Once repaid, ...
... the title of the property is transferred back to you.
Types of Home Loan interest rates
The interest rate is the cost of borrowing funds from your chosen bank. The bank lets you borrow the money to buy your home at a particular rate. It determines the interest you will pay over the Home Loan tenure. The interest rate is indicated as a percentage. When you start repaying the Home Loan, you also need to repay the interest. The burden of your Loan fluctuates depending on the rate the bank decides for your Loan.
Hence, Home Loan interest rates are a crucial factor when considering this Loan. They are usually of two types:

Fixed interest rates

The fixed interest rate means that the bank decides on a rate which stays the same throughout the Loan tenure. This offers the advantage of knowing how much you must repay over the Loan tenure, even before you sign the agreement. Your Home Loan EMIs also stay the same throughout the tenure. This Home Loan interest rate is usually considered ideal for those who want consistency and risk aversion in their financial plan.

Floating interest rates

A floating interest rate changes based on market trends. It might increase or decrease depending on how the market behaves. In this interest rate, the total interest you pay may also go up or down. Consequently, the EMIs also fluctuate. This interest rate suits people with a more flexible financial plan and comfortable with market fluctuations.
Conclusion
A Home Loan lets you fulfil your dream of homeownership and offers several advantages. However, the interest rates are often the most crucial aspect when opting for this Loan. You need to consciously choose the interest you want for your Loan.