There are two types of home loan interest rates: fixed rate and floating rate. However, in Indian there is no such thing as a fully fixed rate, most loans are fixed for an initial period of say 1-3 years, and then convert into a floating rate.
Fixed Rate loans are those where the rate of interest is fixed through the life of the loan. Say you take a home loan at 10% in 2010 to buy a house. Lets say in 2011 the Reserve Bank of India raises interest rates, and as a result banks also raise their rates. If you have a fixed rate on your home loan, your rate will stay fixed at 10%, even though the market rate has moved. Obviously, this means that if the rates go down, you might not be able to benefit from lower rates if you have a fixed home loan.
Floating Rate loans are those where the rate of interest fluctuates or floats depending upon the prevailing rates in the economy. Unlike fixed rate home loans that stay permanently fixed throughout the life of the loan, a floating rate home loan will change depending upon the existing market rates.
This message was edited 1 time. Last update was at 05/03/2010 13:15:34
You also know that what kind of home loans are reqiured ? home loans interest rate are varies from state by state. Home loans interest rate are not easy topic for most people. Compare current home interest loan rates for mortgage programs and lenders in your area, because planning ahead for your loan is the best way to make sure you're finding the cheapest home loan interest rates available.
This message was edited 4 times. Last update was at 30/03/2010 11:59:36
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