To fulfill their dream of owning a house, most people take loans from banks. The rate of interest while taking a loan also plays a big role in making the decision. Many people have a question in their mind about whether a floating or fixed rate is right for a home loan. Both options have their advantages and disadvantages. In such a situation, today we will tell you the difference between the two, which will help you in making the right decision.

What is the fixed interest rate?
In a fixed interest rate, the interest rate is fixed at the time of taking the loan. During this period, the interest rate on your home loan remains stable despite any fluctuations in the market. Through this, you can easily find out what will be your repayments, loan tenure, and EMI.

Fixed-rate home loan option should be opted for in these circumstances:
1. You should be satisfied with the EMI that you have to pay. This should not be more than 25-30% of your monthly income.

2. If you expect interest rates to rise in the future, and hence want to lock your home loan at the current rate.

3. With a fixed interest rate, loan borrowers know how much they have to pay every month, enabling them to plan their future finances.

What is a floating interest rate?
In a floating rate, the interest rate is decided depending on the market condition. This rate is linked to the benchmark rate. After the increase in policy rates by RBI, banks also increased their rates, due to which higher interest rates have to be paid on the loan. Whereas if RBI does not increase the policy rates then banks also do not make any change in the rates.

Floating rate home loan option should be opted for in these circumstances:
1. If you generally expect interest rates to fall over time, choosing a floating-rate loan will also reduce the interest rate applicable to your loan, thereby reducing the cost of your loan.

2. Floating interest rates generally offer lower interest rates than fixed rates. This can make your loan an affordable monthly payment.

Know the home loan interest rates of these banks
Bank of Baroda- 8.40% – 10.65%

State Bank of India- 8.40% – 10.15%

ICICI Bank- 8.95%-9.15%

Punjab National Bank 8.5% to 9%
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