Fixed-Rate vs. Floating Rate: Choosing the Right Interest Rate for Your Home Loan

Fixed-rate home loans are characterised by features such as predictable payments, protection against hike in rates, and risk-averse nature

Predictable payments allow you to benefit from constant interest rates, consistent EMI, and the ease of periodical budgeting

Even when market rates rise unexpectedly, with a fixed interest rate on your home loan, you need not worry about incurring any additional costs

If you’re a risk averse individual, a fixed-rate home loan could help you avoid any uncertainty resulting from fluctuating interest rates

The formula to calculate floating interest rate on home loans is Benchmark rate + Spread*

Floating-rate home loans have lower initial rates, could potentially have a reduction in rates, and provide flexibility in terms of foreclosure or pre-payment

It is important to consider factors such as market interest rate trends, risk tolerance, financial goals, and so on before you decide

Choosing a combination of both the interest rates could also help be beneficial to you by reducing the interest liability