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In your search for a loan against property, one of the major things you should consider is the interest rate. This refers to the interest system on which your loan is set. And for any applicant, there are two kinds of interest rates to choose from —fixed and floating interest rates.
It is important to know which one best suits you best. Lenders charge a percentage on your loan amount based on the interest system that you opt for. The system affects your loan in the areas of the equated monthly instalments (EMIs) and your repayment plans.
This article examines the fixed interest rate, its benefits, shortcomings, and when it becomes an ideal option for you. As you prepare to apply for a loan against property or another loan type, this article will shape your decisions. Read on for more.
Like other secured loans, a loan against property comes with a long repayment tenor. If you take a loan against property from Bajaj Housing Finance, you can get up to 18 years as a tenor based on your credit score and debt repayment capacity. To take this loan, you must provide a property as collateral for the duration of the loan.
The property may be residential or commercial. If you miss a series of EMI payments, you forfeit the property immediately. As part of the loan’s terms, your lender will ask that you choose between the two types of interest rates. Remember that this decision greatly impacts your loan—so, choose wisely.
This is the interest rate that does not change despite the market’s trends. Not even the Reserve Bank of India’s REPO rates can alter a fixed interest rate on a loan against property. The EMIs that you calculated before taking the loan neither increase nor decrease. However, due to its stagnant nature, you will pay higher interest on your loan.
Meanwhile, after some years of repayment, your lender may activate the “reset” option. This means that you get moved from the fixed interest rate to the floating interest rate. The goal is to allow you to enjoy the advantages of both options.
Below are the benefits that you can enjoy when you opt for a fixed interest rate on a loan against property:
Below are the shortcomings of a fixed interest rate on a loan against property:
Here are 3 reasons why to opt for a fixed interest rate:
Bajaj Housing Finance offers a variety of loans against property deals that come with amazing benefits, such as minimal documentation, quick processing, and a long repayment tenor. Also, you can know the maximum loan amount you can request by our unique Loan Against Property Eligibility Calculator.
Ready to enjoy the incredible benefits of our loan against property? Apply online here today.
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Last update on 28-Sep-2021
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