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You should choose the interest rate structure based on your own comfort level, knowledge, and the benefits that you will get from choosing a particular interest rate structure. Let me tell you the ideal circumstances to help you decide:
You should go for Floating Interest Rate when:If you think your income will increase and any rise in interest rates won’t affect your other financial commitments
There is a reliable indication that the interest rates will fall in the future and remain stable during the loan tenure
You know the financial market and under which conditions, the interest rate rises and drops.
You should go for Fixed Interest Rate when:When you predict a rise in the interest rate due to unfavorable market conditions
When you are comfortable paying the current interest amount and want to keep the EMIs fixed
When you do not have the market expertise to predict how interest rate moves and would instead prefer stability.
Difference Between Fixed Interest Rate and Floating Interest Rate| Floating Interest Rate | Fixed Interest Rate |
Lower Interest Rate |
Higher Interest Rate |
Affected by changes in the financial market |
Not affected by financial market conditions |
EMIs change as per interest rate or MCLR |
Fixed EMIs |
Suitable for long term (20 to 30 years) |
Suitable for short/medium term (3 to 10 years) |
Higher risk |
Lesser risk |
In case you are worried about making the wrong decision, then let me tell you that you can change from fixed to floating interest rates and vice-versa by paying a conversion fee of up to 2% of the total loan amount.
Read more:
What is difference between floating and fixed rate of Interest?
What is floating interest rate?
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Which rate of interest(floating or fixed) is best for the salaried person ?
Clinton
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1
3 Year
2021-10-26T17:45:52+00:00 2021-11-09T18:27:53+00:00Comment
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