Floating rate loan is a better option

Q: Is Floating rate loan is a better option in case of property buying?

Gautam G,

8th December 2015

Home Loan in Kolkata

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Hi, thanks for the wonderful information, Right now I am holding two loans, one is a personal loan and another is a home loan, I would like to know whether I can club my personal loan with the home loan, so that I can pay only one EMI?

Sajal Das, Kolkata

9th December 2015

Comment

Hi, I too have more that one loan and I also inquire about the same with my holding bank. As per bank norms you cannot club home loan and personal loan as both are different products. Yes, You can go for a top-up loan only if your income is sufficient to service the EMIs on both the home loan and the top-up loan. The bank will provide top-up loan on the security of the house and you can prepay your personal loan with it.

Promit Dutta, Kolkata

9th December 2015

Hello, I would like to add my experience in home loan, I have opt for floating interested rate for my home loan. In case of a floating rate loan, the rate of interest varies with the market situations. This type of home loans is linked to the base rate of the financial institution, plus a floating element to it. So, if the base rate varies the floating interest rate also varies.

debabrata sarkar, Kolkata

9th December 2015

A primary advantage of a floating interest rate home loan is it's miles at the least 1-2 percentage less expensive than a set interest rate loan. In addition if the floating rate goes higher than the fixed rate, it will be for a limited period of the tenure of the loan and not for the entire tenure.. The interest rate continues fluctuating, and rise and fall in keeping with the monetary basics.

Sashidharan,

9th December 2015

Thanks all of you guys, I am planning to take home loan first time , I just want to What are the documents required to take home loans?

Rishi Dev,

9th December 2015

It is extremely important for you in case you are taking any home loan. In case you have chosen for the floating interest rate scheme then strictly pay attention when RBI increases or decrease the interest rate. Usually RBI revised their base rate quarterly. Check minutely whether reflection takes place on your loan or not.

Alokesh Nandi, Kolkata

9th December 2015

@ Dev,
To take home loan you need to submit basic documents along with application. It determines the rate of interest and amounts to be sanctioned as home loan. The amount of loan varies for each person depending upon their repayment capacity and credit rating.

Sashidharan,

9th December 2015

Necessary document:
1. Duly completed application form with Passport size Photo,
2. Fee Cheque,
3. Proof for Photo and age,
4. Repayment Track record of existing loans (if any),
5. Residence Address proof and signature verification proof,
6. Copy of Sanctioned plan and sanction letter.

Alokesh Nandi, Kolkata

9th December 2015

Hi, I think there are various loan schemes, but the most popular are fixed and floating rate. A floating interest rate is variable in nature. A floating interest loan offers flexibility to debtors or borrower. In the case of interest rate drops, the borrower will gain and in case of an increase in the interest rate borrower has to pay more interest.

Anoop K, Chennai

8th December 2015

Comment

Thanks Anoop for your quick response but how interest rate fluctuate in home loans?

Gautam G,

8th December 2015

Home loan interest rate is linked to the base rate of the bank. So, when the base rate changes, the interest rate also changes.To know more about this fluctuation you have to watch out RBI announcement every quarter.

Anoop K, Chennai

8th December 2015

In the case of a fixed interest rate loan, the interest rate stays fixed for a designated interval of time. In this case, the interest rate would not trade with market fluctuations, it remains same for a fixed interval of time. A fixed rate house loan is just right for individuals who wish to have a constant and predictable monthly repayment schedule.

Awar Ali,

8th December 2015

Which one is better, floating interest rate or fixed interest rate? What is the drawback of both types of loan scheme?

Gautam G,

8th December 2015

As per my personal understanding, floating interest rate is the best option while buying property.The primary disadvantage of a fixed rate loan is that it usually comes with an interest fee of 1-2.5 % greater than a floating rate loan. Also, one does not get any advantage of reduction in interest rate within the certain time-frame.

Anoop K, Chennai

8th December 2015

Yes you are right dear. I think there is no permanent fixed interest rate, in FI rate scheme , interest rate will revise at certain interval, say 1 to 3 yrs. So it is better to take advantage of floating interest rate if you are taking home loan for longer duration. A fixed interest rate loan is a better option in an increasing interest rate regime.

biman roy, Kolkata

8th December 2015