Which one is better: floating or fixed rate home loan | By ResaleAdvisor

Which one is better: floating or fixed rate home loan | By ResaleAdvisor



When it comes to choosing between a floating or a fixed-rate home loan, it is important to consider your financial situation and what kind of risk you are willing to take. In the Indian market, home loans are available in both floating and fixed-rate options and thus, it is important to understand the advantages and disadvantages of both before making a decision.


A floating-rate home loan is a loan where the interest rate is linked to the Reserve Bank of India (RBI) repo rate. This means that the interest rate fluctuates with the market and is subject to change. The main advantage of a floating-rate home loan is that it is typically lower than a fixed-rate home loan. This makes it an attractive option for those who want to save money on interest payments. Additionally, if the repo rate falls, your floating-rate home loan will become cheaper as the interest rate will decrease.


However, there are also some risks associated with a floating-rate home loan. Since the interest rate is subject to change, you will never know how much your EMIs will be in the future. Thus, if the repo rate increases, your EMIs will also increase. This can be a financial burden, particularly for those who have a tight budget.


On the other hand, a fixed-rate home loan is a loan where the interest rate is fixed for a certain period of time. This means that even if the repo rate changes, the interest rate on your loan will remain the same. The main advantage of a fixed-rate home loan is that it provides financial stability as you will always know what your EMIs will be, regardless of any fluctuations in the market. Additionally, if the repo rate increases, you will not be affected as your interest rate will remain the same.

However, the downside to a fixed-rate home loan is that it tends to be more expensive than a floating-rate home loan. This is because lenders charge a premium for fixing the rate for a certain period of time. Thus, those who are budget-conscious may not find a fixed-rate home loan to be the most attractive option. 


Ultimately, the decision between a floating or fixed-rate home loan should be based on your individual financial situation. If you are looking for a loan with lower interest rates and are willing to take the risk of fluctuating EMIs, then a floating-rate home loan may be the best option for you. However, if you are looking for a loan with financial stability and are willing to pay a higher interest rate, then a fixed-rate home loan may be the better option.


If you are considering taking a home loan, then reach out to us by visiting our website  www.resaleadvisor.com . We can help you find the best home loan option to fit your individual needs. Contact us now and let us help you make the right decision for your future.

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