If you are thinking of buying a home with a loan, you need to know about a home loan interest plan. This plan will determine your interest rate. The bank offers 3 types of interest plans. These are fixed interest, floating interest and flexi interest plans. It is very important to know about any of these plans before choosing them. Here you are told in detail about this plan.
Fixed Interest Plan
In this the interest rate of your loan remains fixed. In this plan you get a home loan from a bank at a fixed rate. If the interest rate changes due to market fluctuations or repo rate reduced by the RBI for any reason, there is no change in the interest paid by the bank. It also does not change the EMI of your loan. The biggest advantage of this is that if the interest rate goes up in the future, it will not affect you because, the interest rate on the loan you have taken will not go up. However, it also has its disadvantages because, if the interest rate is reduced in the future, you do not get the benefit.
Floating Interest Plan
The interest in a floating home loan plan is linked to the base rate of the bank. For this reason the interest rate decreases or increases due to the change in the base rate. The rate of interest in a floating home loan plan is lower than a fixed home plan. However, banks will raise interest rates if the RBI raises the repo rate. In this case, the person taking home loan at floating rate may have to pay more EMI.
This plan is a mixed form of floating and fixed plan. The most important thing is that the customer can change his plan to fix or floating in the middle of the loan period according to his needs. Under this plan, a loan is given at a fixed interest rate for a few years and then it becomes floating. Customers choose both fixed and floating options when choosing this plan. If interest rates rise in the future, it will not affect EMI.
If you take a loan on a fixed plan and if the interest rate goes up in the future, it will not be a burden to you. If the interest rate is low and you have a fixed rate loan then cheap interest can be obtained by transferring in floating. However, the customer has the facility to change the plan only once in the entire loan period.