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Fixed and Floating Home Loans Choose a Better option

You are at the most important juncture in your life time – you are going to buy a house.  Buying a house is not a joke – this has to follow a well thought and well planned approach and once you decide on the home that is going to be yours, the next question is how to choose home loans.  A good ninety five percent of home purchasers go in for home loans to help them make their purchase, so a good understanding of what kind of interest rates to go in for makes an impact.

When you go in for home loans your bank will give you an option to choose from fixed and floating interest rates.  If you have to make a choice, then you have to know the positives and negatives of going in for this and then make a very well informed decision.  Considering the fact that you cannot change from one mode to the other after you have signed on the dotted lines, it is imperative that you get this right the first time – so if you don’t know how to choose home loans, then talk to someone or do the right research before jumping into it.

Fixed rates as the name suggests are going to remain over the many years that your home loan will last.  Even if there are any rate fluctuations because of market trends, you can be safe from them and your EMIs are also going to be the same - there are going to be no shocks as far as your monthly installments are concerned.  However, the down side to this is that there are some banks which offer home loans that are fixed only for a part of the loan tenure – read the instructions clearly before you decide.  Also, in the rare scenario that rates drop because of the markets, your fixed rate is not going to change, so you are going to be losing out.

Floating rates are much lower when compared to fixed rates and this is one primary reason why most of the loan seekers go in for this mode.  And anybody who advises on how to choose home loans also suggests that these floating rates are better, as there is a good chance of paying much lesser than when you go in for fixed rates.  However, the EMI every month keeps fluctuating and this could be a very important factor especially if you have lesser affordability and you are running your expenditure on strict budgets.  So, make the choice intelligibly.

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