Understanding Home Loan Interest Rates: Fixed vs Floating

1. Floating Interest Rates

Floating rates are linked to external benchmarks (such as RBI's repo rate). They fluctuate according to market dynamics, usually starting lower than fixed rates but carrying variability risk.

2. Fixed Interest Rates

Fixed rates remain constant throughout the tenure or for a predefined initial period. They offer budget predictability but are priced higher initially.

3. Which Should You Choose?

If interest rates are high and expected to fall, floating is ideal. If interest rates are historic lows and expected to rise, lock in a fixed rate to save in the long run.