For most people, buying a home is the most significant investment they would have made in their lives until that point. Most prospective home buyers make it a point to familiarise themselves with concepts like First Home Owner Grants, Lender Mortgage Insurance, Income Assessment and so on. There are quite literally hundreds of home loans from banks and financial institutions with different features and benefits. The interest rate is definitely not the only thing to consider. However, interest rates play the most significant role in deciding a home loan.
With the changing trends, banks and financial organisations have become extremely forthcoming in lending loans to prospective house owners. Most offer two types of interest rates – fixed and floating or variable rate.
Fixed interest rate means that the rate of interest remains fixed throughout the term until you repay the loan. On the other hand, floating rate of interest means that the rate of interest fluctuates according to the market conditions. Fixed rates offer two advantages. First, they provide certainty and allow for fixed repayment amounts. Secondly, you can lock in a low current rate of interest if you feel that the rate would rise over the course of your repayment period.
Points to keep in mind when considering a fixed rate home loan
• Finding Appropriate Lender: Once you have zeroed in on the property, it would be a good idea to check with different banks and financial institutions for their home loan products. You may find that the rate of interest varies from one organisation to another. Also, not all lenders offer home loan at fixed rates.
• Planning your Budget: Along with the lender, you need to work out a loan plan that would leave you with enough money to take care of your other responsibilities and needs. Do not go for a plan that might drain you financially. Plan your current and future budgets carefully.
• Negotiate: Do not be in a hurry to close the deal. There is always some scope for negotiation. It would be a good idea to negotiate with the bank for the best possible rate that they can offer you.
Getting a home loan at fixed rate of interest would help you fulfil your dream of owning your home. Be sure to plan carefully and do your research beforehand.
With the changing trends, banks and financial organisations have become extremely forthcoming in lending loans to prospective house owners. Most offer two types of interest rates – fixed and floating or variable rate.
Fixed interest rate means that the rate of interest remains fixed throughout the term until you repay the loan. On the other hand, floating rate of interest means that the rate of interest fluctuates according to the market conditions. Fixed rates offer two advantages. First, they provide certainty and allow for fixed repayment amounts. Secondly, you can lock in a low current rate of interest if you feel that the rate would rise over the course of your repayment period.
Points to keep in mind when considering a fixed rate home loan
• Finding Appropriate Lender: Once you have zeroed in on the property, it would be a good idea to check with different banks and financial institutions for their home loan products. You may find that the rate of interest varies from one organisation to another. Also, not all lenders offer home loan at fixed rates.
• Planning your Budget: Along with the lender, you need to work out a loan plan that would leave you with enough money to take care of your other responsibilities and needs. Do not go for a plan that might drain you financially. Plan your current and future budgets carefully.
• Negotiate: Do not be in a hurry to close the deal. There is always some scope for negotiation. It would be a good idea to negotiate with the bank for the best possible rate that they can offer you.
Getting a home loan at fixed rate of interest would help you fulfil your dream of owning your home. Be sure to plan carefully and do your research beforehand.
