How to select your housing loan? Should one go for fixed interest or floating interest home loans?
Home loans have been a savior for those who have been longing to buy their dream house. With home loans you can buy a house and the amount can be paid off in installments. There are many finance companies that can finance the purchase. But choosing Fixed or Floating rate has been a dilemma of many people.
Fixed home loan rate is fixed initially before applying for the loan and “Floating rate” is the interest rate that keeps changing depending on some other external interest rate. Most of the banks fix the rates for a period of 5 years. Off late their have been fluctuations in the rate of interests.
Going for Fixed interest rate is a safe option. It can be a good deal if the interest rate increases during the loan period and can be bad also if the interest rates slump during the loan period.
Floating home loan rates, the interest rate is decided by other factors. The interest rate is dependent on the fixed deposit interest rate which in turn is dependent on the market. However instead of external interest rates floating rates also depend on internal interest rates which is not dependent on market.
Thus, it is advisable to check the rate of interests and view the market trends. Analyze the market scenario and also make sure that the floating rate has decreased down over the past two years. In case of fixed rate make sure you don’t end up paying high premium.
Apart from fixed and floating rates there is also something called as semi fixed rates. According to this scheme the rates remain same for 3-5 years and after that interest rates are changed again. This is another version of fixed rates. So make sure you know what you are choosing. If the interest rates are high, go for floating rate loan and if the rate are low go for a lower fixed rate for at least 3-5 years.
Keep these things in mind. In case you are not sure about the procedure of applying for loan you can visit an institution and they will guide you thoroughly.
Here is the list of documents required for the home loan request For Salaried Employee:
1. Latest salary slip showing statutory deductions
2. Form 16 (tax documents)
3. Age proof(birth certificate/voter identity card/driving license/school leaving certificate)
4. Address proof(phone bill/electricity bill/ration card) For self-employed individual
1. Computation of income for the previous two years
2. Balance sheet and profit & loss account for the previous two years
3. Age proof(birth certificate/voter identity card/driving license/school leaving certificate)
4. Address proof(phone bill/electricity bill/ration card)
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