Should You Choose Fixed Or Floating Housing Loan Interest Rates?

Selection of home loan interest rates is the toughest part of home loan products. If you understand your current and future financial situation, most borrowers can choose it. But, the riskiest part is to anticipate your future earnings and cash flow well enough. It a challenge to anticipate all factors well for the financial experts too. Therefore, it is far more sensible to consider fixed and floating home loan rates. Then, make the decision.

Fixed:

When you consider fixed housing loan interest rates, there is a single advantage. These home loan rates will remain consistent for a foreseeable future, in most cases, three to five years. So, if you can afford a bit higher home loan interest rates, you can choose it. But, there are few disadvantages too. You will have to pay higher home loan rates in India. Additionally, you will have to pay prepayment charges with the prepayments. So, it makes sense to consider floating rates if you have any kind of budget constraints.

Floating:

This is the lower housing loan interest rate. It is the popular choice in India today for a reason. You can use the gap between fixed and floating rates for shorter home loan tenure or a larger property. In addition, you can prepay the loan at 0% charges and clear your home loan in a lesser amount of interest. However, there is no alternative to facing the sudden burst in home loan rates of India. You will need to remain ready for them at any point of time. It is especially challenging during a period of financial or medical emergency.

Hybrid:

This is the least considered option. When you have to choose a type of housing loan interest rate, this is the latest and least popular choice. There are two main reasons for the same. Firstly, it is a complex home loan rate in India. Secondly, you need to maintain two different tracks of two different rates. It also gets more time-consuming. At the end of the day, fixed and floating home loan rates seem far simpler and more appealing.

So, you can choose fixed home loan interest rate if you can afford it. Alternatively, you can go with the popular type. It will not be easier to repay if you cannot be shock-proof to any increase in the housing loan interest rates. Thus, it will depend on your financial capacity and mental readiness to adjust to these fluctuations. Choose the one that suits you well.