A mortgage is a secured loan. An individual uses their residential property as mortgage to avail credit as per the borrower’s eligibility and the value of the property mortgaged. Mortgage loan interest rates on a loan depend on how well the borrower is able to meet the eligibility criteria of the lender and his/her CIBIL score.
Before applying for any form of a loan against property, it is essential to know about the different interests of a housing loan.
What is a Secured Loan?
A secured loan is where the borrower uses their movable or immovable property like residential property as mortgage to avail loan. A mortgage loan is a fine example of a secured loan.
A secured loan can be availed in two rates of interests - fixed interest rate and floating interest rate. The distinctive aspects of these interest rates are –
What is a Fixed Interest Rate?
A fixed interest rate stays unchanged over the tenor of the loan once the loan is availed.
When to Opt for a Fixed Interest Rate?
Floating mortgage loan interest rates are market-linked and vary as per revisions to the base or reference rate of the lender.
When to Opt for a Floating Rate?
If the borrower has a dilemma about the movements of market rates, then they can opt for a floating rate. If a borrower expects the downfall of interests, then they can opt for a floating rate of interest.
Mortgage loan interest rates comprise both fixed vs floating interest rate. Before availing a loan, one can compare and understand that fixed rate or floating rate and which is a better option for a loan against property.
Before applying for any form of a loan against property, it is essential to know about the different interests of a housing loan.
What is a Secured Loan?
A secured loan is where the borrower uses their movable or immovable property like residential property as mortgage to avail loan. A mortgage loan is a fine example of a secured loan.
A secured loan can be availed in two rates of interests - fixed interest rate and floating interest rate. The distinctive aspects of these interest rates are –
What is a Fixed Interest Rate?
A fixed interest rate stays unchanged over the tenor of the loan once the loan is availed.
When to Opt for a Fixed Interest Rate?
- If the borrower doesn’t mind paying the EMI, they’ve committed.
- If the borrower expects a rise in the real estate market interest rate.
Floating mortgage loan interest rates are market-linked and vary as per revisions to the base or reference rate of the lender.
When to Opt for a Floating Rate?
If the borrower has a dilemma about the movements of market rates, then they can opt for a floating rate. If a borrower expects the downfall of interests, then they can opt for a floating rate of interest.
Mortgage loan interest rates comprise both fixed vs floating interest rate. Before availing a loan, one can compare and understand that fixed rate or floating rate and which is a better option for a loan against property.
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