Opting for Home Loan at Fixed Rate: What to Check?
Buying a home is a dream of every working professional or a businessman. There are many attractive schemes opened up by the builders and contractors. However, it is not easy to buy a home, especially within the metropolitan cities like Mumbai, Delhi or Bangalore. Therefore, many people opt for the home loans provided by the financial institutions or banks. These loans are considered as a secured mortgage by the lenders who organize such dealings. Home loans are now opted by nearly 70% of home-buyers, making it in a huge demand across the world.
What is Fixed Rate Home Loan?
Fixed rate home loans depict the amount given by lender for purpose of buying a house, with fixed interest rate for a large tenure. These loans are given out with an agreement to pay a fixed installment monthly or periodically to the lender. The interest rates would remain the same over the period of loan, no matter what the economic situation is. These kinds of loans are often preferred by the consumers as they are less risky than the floating interest rates. However, sometimes fixed rates are beneficial for the lenders, as they can offer higher interest rates at the time the market is offering lower rates for loans.
Fixed Interest Rates of Major Bank:
|
Banks |
Loan upto 30 Lac |
Above 30 Lac |
|
HDFC Ltd |
11.50% |
11.75% |
|
Axis Bank |
11.75% |
11.75% |
|
ICICI Bank |
10.40% – 11.00% |
10.65% – 11.25% |
|
PNB HFL |
11.00% to 11.50% |
11.25% to 11.75% |
Benefits of Fixed Rate Home Loan
If you are opting for the fixed interest rates, then you should know the benefits of this scheme in detail. Following are some of the main benefits of the scheme:
- Easy for calculation: The basic advantage of the fixed rate loans is they are easy to calculate. There are no complications as the rates are not changing from year to year.
- No sudden increase in repayable amount: As the repaying customers, the persons do not have to face increase in the total amount that is repayable. He can save the top-up money instead of paying it to the lenders.
- Free from market risks: Markets keep changing the directions and investments as per the demand-supply law. Thus, there is always a risk when it comes to rely on the market floating rates. Fixed installment scheme will nullify any of such risk.
Things to Check before Opting for Fixed Rate Home Loan
Though the fixed rate schemes do have any advantages, you have to check for certain things before applying for them these important points can be stated as follows:
- Fixed rates can also be changed under the RBI banking policy. Therefore it is necessary to check the details of the previous policies and predict the approximate changes.
- Fixed home loans are also provided by local lenders, however,, often they include hidden costs with the amount. So, it is necessary to check the details and authorization of any financial institution before obtaining loan from them.
- The installments of the fixed home loan are rigid and unchangeable. So, they must be planned after taking into account the income in later years.
