What is floating and fixed interest rate?

Q: I have heard a lot about the terms- floating and fixed interest rates. As I am applying for home loans, I would like to know more about it.

Syed Ali Khan, Hyderabad

17th October 2011

Home Loan in Hyderabad

home loan

interest rate

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settled methods you mark a contract at the rate offered now and it will never show signs of change.

folks do this bc you never know if the rate will go up.. at the same time you might miss out if the rate goes down.. its a bet either way

drifting methods your rate will run here and there with the business...
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BRIONY, Bhopal

16th January 2013

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In a floating interest rate, you interest payment will vary according to the market lending rate. If interest rates rise your interest payments will rise and vice-versa. You bear the risk of interest fluctuations in the market. Floating rates are slightly cheaper than fixed interest rates.In a fixed interest rate, your interest rate is fixed over the entire tenure of loan.

Abdul Zafar, Hyderabad

17th October 2011

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