With real estate market trends in Thrissur indicating that lifestyle apartments developed by reputed builders in Thrissur are gaining popularity over regular apartments, banks and financial institutions are rolling out a variety of home loan products. This makes it easier for you to realize your dream home.
It is important to compare the different types of home loans available so that you make the right choice and protect your finances. Obviously, the first thing to do is to decide on the price range of the flat; it can be tempting to buy a very expensive one because loans are available, but you should be able to bear the burden of the EMIs.
Comparing the down payment, tenure offered, interest rate, processing charges, and foreclosure charges will help you make the right choice when planning to buy a flat in Kerala. One of the aspects you should be aware of regarding home loans is the type of interest being charged: fixed and floating.
Fixed Interest Rate
As the name says, the rate of interest stays fixed throughout the tenure of the loan, and your EMI stays unchanged. The market rates may rise or fall, but it will not impact your EMI.
Advantages
1. Steady and Predictable
Buyers, especially young families and salaried professionals, generally don’t want unpleasant surprises and prefer predictable monthly expenses. They can benefit significantly from fixed-rate home loans. You know exactly what your EMI will be month on month, till the loan is paid off. This can help you budget properly.
2. Market Fluctuation-Resistant
When the economy is unstable, interest rates can fluctuate a lot. Under fixed rate loans, your EMIs won’t change even if the rates suddenly increase due to inflation or other factors.
3. Long-Term Benefits
Purchasing a flat under a fixed interest loan for your own use will help you avoid unforeseen increases in expenses. You will also get the benefit of long-term value appreciation, and can sell for a profit in the future.
Floating Interest Rate
The floating interest rate is pegged to the benchmark rate and changes according to the market conditions. Whenever the RBI raises the repo or benchmark rate, your EMI is likely to increase and decrease when the RBI lowers it.
Advantages
1. Lower Initial Rate
Floating interest rates are generally cheaper than fixed rates initially, which means you have smaller and more affordable EMIs to start with.
2. Benefit When Rates Decrease
Depending on changes in government policies or economic situations, interest rates may decrease. Then your EMI also decreases, letting you repay the loan sooner or save money in the long run.
3. Ideal for Shorter Tenures
NRIs and well-paid professionals often prefer short-term loans to repay their debts quickly. Floating rates can help lower the cost of your loan, as you benefit from market-linked rates.
Ideal Option for Thrissur Home Buyers
Both have their own advantages. The right choice depends on your financial situation and goals.
In Stable Markets
If the economic indicators point towards a possible increase in the repo rate, as interest rates have remained the same for a long time, you should choose fixed-rate loans.
In Volatile Markets
Market volatility means rates can go up and down; if the indications are that rates may fall, floating rate loans are ideal.
Individual Risk Appetite
If you don’t want to take much risk and prefer stability, fixed-rate loans are the best.
However, if you are willing to risk a rise in the rate because you may get the benefit of a lower rate at some time, you can choose floating rate loans.
Whether you are an NRI or a young professional, following Real Estate Investing in Trivandrum: 10 Best Strategies For Beginners and Pros can help greatly.
Investors seeking a steady rental income can opt for floating rates to keep initial costs low. Long-term investors and home buyers can choose fixed rates to get stability.
Conclusion
It is important to know the differences between fixed and floating interest home loans. Both have their benefits, and the choice depends on your needs and goals. Making the right decision will help you have a smooth purchase process and peace of mind later.
As one of the most reputed builders in Kerala, Varma Homes brings you well-designed lifestyle apartments in prime neighbourhoods in Thrissur. All projects are RERA-approved, feature superior construction and world-class amenities.
Being in the industry for years, we have developed excellent relationships with banks and financial institutions. We can connect you with lenders and provide services to ensure that you have a smooth loan application process.