While availing a property loan, you must compare the loan against property interest rates as your EMIs will depend on the same. Since it is a secured loan, interest rates are quite affordable in this case. However, you must be aware of the types of interests rate available in the market. Hence, to determine which is better for them between fixed vs floating interest rate so that they can reduce the total cost associated with their loans.
The Interest Rates are Classified into Two Types:
Fixed Rate of Interest:
A fixed-rate would remain unchanged throughout your tenor, i.e. fluctuations in the financial market will not affect this rate. If you are willing to pay a fixed EMI, this is an ideal option.
Floating Rate of Interest:
In this case, your rate is linked to the MCLR, and thus, changes in the repo rate primarily leave an impact on the same. Therefore, it might keep altering according to market fluctuations.
Essential aspects that affect the interest rate
Credit Score:
This score determines your creditworthiness and the loan against property interest rates charged. If an applicant’s score is more than 750, he or she would be treated as a priority.
Tenure:
A loan against property typically offers tenures up to 15 years. Opting for a longer tenure may increase the rate of interest.
Property Type:
Since this loan is mortgage-based, the asset and its condition leave a significant impact on the rate of interest.
Along with the rate of interest, make sure to check all the charges associated with the loan. These may include processing fees, penal interest, mortgage orientation fees, EMI bounce charges, etc.
Additional Read: All You Need To Know About Loan Against Peoperty Interest Rate
