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Opt for floating rate on home loan
Published on Thu, Aug 03, 2006 at 19:13, Updated on Fri, Aug 04, 2006 at 13:00 in Money » Tax section
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New Delhi: The cost of your home loans is going up and if experts are to be believed, more hikes are expected. So is this a good time to take a home loan or to buy your dream house?
Home loan dealer with a leading bank Dinesh Singh selling loans deals for the past five years says he used to get at least 35 to 40 consumers every month asking for loan.
However, as interest rates head north, the question that every consumer is asking is whether to go for a fixed or floating rate while choosing the deal.
While the floating rate of interest depends on the current rate of interest and is seen as more conducive, fixed rate is expensive but at least protects a customer from constant rate hikes.
"Despite all odds, of all the people who take home loan from us, almost 99 percent of people borrow it on floating rate of interest, nobody wants to let the immediate benefit go," Manager Sales, Home Sloutions Dinesh Singh says.
While most customer still prefer a floating rate home loan, people are now thinking if it is the right time to making a shift to fixed rate home loans?
Let us take a look at the facts:
In the last 14 months, interest rates on home loans have gone by two per cent. This means your EMI per lakh has gone up by Rs 112.
So will the interest rates continue to rise or is it time customers expect a reprieve?
“I don't think in the next 5 to 6 years, that much difference will take place, unless economy goes haywire, but that possibility is not there,” SC Gupta, CMD, Punjab National Bank says.
Looking at the pros and cons of the present rate hike, it seems that one should go for a floating rate loan despite the rising trend in interest rates.
Look for a bank that offers you a rate of interest that follows the market rather than one that decides its rates 'internally'.
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