How to Lock Your Interest Rate with a Dual Interest Rate Home Loan

When you think of a Home Loan, the first thing that usually comes to your mind is the interest rate. It’s the number that determines the amount you must pay each month and how you will manage your finances over the long term. Now imagine not having to decide right there and then between fixed and floating rates. Dual Interest Rate Home Loan allows you to secure a competitive rate for the first three years, then make a seamless transition to.  

Read further to know more about the Dual Interest Rate Home Loan and how you can lock your interest rate for the first three years and ensure predictable EMIs.  

How Does the Dual Interest Rate Home Loan Structure Work?

A Dual Rate Home Loan will have a fixed interest rate for the first three years of the loan term, thereby keeping your EMI amount unchanged. After that, your loan automatically switches to a floating benchmark rate, and that spread remains the same. What that means is when the rates in the market go down, your EMIs can also do so. The opportunity to lock in rates for the first three years, and then benefit from rate reductions in future, makes the Dual Interest Rate Home Loan an attractive option for borrowers today.  

Key Features of a Dual Interest Rate Home Loan

Here’s what you stand to benefit from when you apply for a Dual Interest Rate Home Loan:  

• You get predictable EMIs and competitive rates, which are ideal for the formative years when having a stable income is important.  
• The loan switches to a floating rate at the end of the fixed term, allowing you to benefit if market rates decrease.  
• If the funds come from your own sources (i.e., not borrowed from another bank or NBFC), you can make partial prepayments during the allotted period without incurring any additional fees.  
• By paying a conversion fee, you can switch to floating before the three-year mark if you're ready. 
• It's simpler to plan ahead and manage your budget when your initial EMIs are predictable. 

Why the First Three Years Make A Difference?

The initial phase of a Home Loan is often the most demanding. You may be relocating, paying for remodelling or moving expenses, and modifying your monthly spending plan to accommodate EMIs. At this point, stability is invaluable. 

You can protect yourself from market fluctuations during this time by locking in a fixed rate for the first three years. You can handle other obligations stress-free because you know exactly how much you're paying each month towards your Home Loan. The floating rate starts after those three years are over, and by then, you'll be better equipped to manage changes. 

Eligibility and Documentation for Home Loan

Eligibility for a Home Loan depends on whether you’re salaried or self-employed. Salaried applicants should be Indian citizens (NRIs are included) aged between 23 and 67 years**. Applicants should have a minimum of 3 years of work experience in a reputed firm. 

Self-employed applicants, on the other hand, need to be Indian residents between the age range of 23 to 70 years**. They should have a business vintage of 3 years.  

Both self-employed and salaried applicants should ideally have a CIBIL score of 750 or above  

**The upper age limit is considered as age at the time of loan maturity. Additionally, the upper age limit for applicants is subject to change, depending on the property profile. 

The documents required may vary based on the type of employment as well. Some common documents include identity and address proof (KYC), mandatory documents like PAN Card or Form 60, photographs, income proof (salary slips, Form 16, or ITR and P&L statements for the self-employed), and six months of bank statements. Note that you may be asked for additional documents during the time of loan processing.  

Every borrower’s Home Loan journey is different. Some value predictability above all, while others are open to market-linked changes from the start. A Dual Interest Rate Home Loan is ideal if you want a balance—certainty in the beginning, flexibility in the long run. 

If you’re planning to take a Home Loan soon, think about your first few years as a homeowner. Would it help to know your EMIs are fixed while you settle in? And later, would you want the chance to benefit if rates ease? If the answer is yes to both, you can consider this option.  

*Terms and conditions apply.