Fixed vs Floating Home Loan: Which one is better?


 When you are about to buy a flat for sale in Trivandrum, Kerala, your dream home, you have to make decisions which can have a serious impact on your life. You have to analyse your current financial situation and decide on how much home you can afford! Even if you go over your budget, not to worry! You can always opt for a home loan. But do not be in a hurry. Do give careful consideration. Then comes the question of Fixed vs Floating Home Loan: Which one is better? Here are some pointers from luxurykeralaflats.com, the no.1 portal for buying or selling flats for sale in Kerala. Read on...


Fixed Rate Home Loan


The home loan comes with a fixed rate of interest which is fixed at the time of availing it. There are also variants of the home loan available which allow you to fix your interest rate for specific periods of 2, 3 or 10 years. Fixed rate loans are priced slightly higher than floating rate loans.


You should opt for a fixed rate home loan when you are about to buy a flat for sale in Trivandrum if:


  • The EMI you are committing to pay does not ideally exceed 25-30% of your take-home monthly income.

  • You believe the interest rates will rise in the future and hence, would like to keep your home loan at the existing rate.


The fixed rate home loan gives you clarity on what your repayments will be right from the start. This gives you the confidence to budget accurately and plan your finances.


Floating Rate Home Loan


Also known as ‘adjustable rate home loan’, the floating rate home loans’ interest rate change according to the market interest rate. They are linked to the lender’s benchmark rate. When there is a change in the benchmark rate, the interest rate on the loan also changes proportionately.


In floating rate home loans, the interest rates are reset at specified intervals like every quarter or half of a financial year or it could be unique to each customer. The reset is done depending on the date of first disbursement of his home loan or linked to your loan anniversary. The EMI may remain the same unless you may request the lender to revise your EMI instead of the loan tenure.


When you are about to buy a flats for sale in Trivandrum, Kerala you should opt for a floating rate home loan:

  • If you think interest rates have chances of falling over time. This will result in the falling interest rate of your loan leading to reducing the cost of your loan.

  • You are unsure about interest rate movements and would prefer to go with the market rates.

  • You need some benefit in terms of the cost of your loan. 

Browse through luxurykeralaflats.com if you are planning to buy flats for sale in Kerala. We partner you through it the whole way!

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