Fixed plus floating home loan schemes
The customer's choice between the fixed rate and floating rate for home loan is a big decision
. As interest rate increases, the fixed rate tends to be more popular in the customers as they offers stability. However, the disadvantage is the customer doesn't get the benefits of the lesser interest rate, in case market rate goes down. Floating rates are more suitable for the customers as they get the benefits of the lesser interest rates when market rates drops. Additionally, the recent study shows that there is no sign to increase in the interest rate. Since last few months, there is a huge change in the
home loan market. Almost all banks and financial institutions have introduced their dual rate home loan schemes to attract the customers. The scheme is combined with fixed rate and floating rate. In these schemes, the customer gets the opportunity to lock their interest rate at specified rate for the first few years of the tenure and at the end of the tenure the rate is shifted to prevailing floating interest rate in the market. These schemes seems more attractive, because customer gets the benefits of the lower fixed interest rate. At present, the floating rates are more popular in the market, but the large number of customers are attracting towards these schemes as they get the benefits. The fixed rate can be anywhere between 8% and 9% for the fist 2 or 3 years. Some of companies also offers fixed rate for 5 years, but interest rate can be slightly higher than the tenure of 2 or 3 years. For instance, here are mentioned some leading providers rates for a fixed plus floating home loan schemes-
-SBI Easy Home Loan- 8% for 1st year and 8.5% to 9% for 2nd and 3rd year
-LIC Housing Finance Fix-O-Floaty- 8.9% for 3 years
-Punjab National Bank- 8.50% for 3 years
-Axis Bank Power Advantage scheme- 8% for 1 year and 8.25% for 2 years scheme.
Fixed plus floating home loan schemes
By: Habibulla Antule
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