Home Loans – Should I Opt For ‘Fixed’ or ‘Floating’?

May 10, 2007	(1 votes, average: 4 out of 5)  Loading ...
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The year 2006 brought a time for celebrations for all the sectors including equity, debt, commodities, and Indian real estate market. Considering the performance of ULIP, it is associated with the capital market. ULIP’s and all life insurance products are looked upon as a very long term saving product and risk cover. It is highly beneficial for the security of long term savings like retirement days and child’s education.

The year did well for home loan investors as well. The market for residential spaces has grown at 25%. With interest rates on home loan hitting the sky, borrowers are availing loans for higher tenures. Increasing real estate prices is one of the factors influencing the market growth of home loans.

While shopping for the home loans, the question which bothers people the most is whether to go for fixed rate of interest or floating interest rate. Home loans are long term loans which go over 20-25 years.

If the growth rate of 8% or above continues in future, incomes will grow to great extent and so is the liquidity in the system. This implies a significant drop in the interest rates. They may witness stabilization as well. Considering the same, most people are opting for floating rate of interest on home loans.

Talking about the progress of real estate in 2007, the prices are expected to go up 10-15%. As such, there are no comments on this issue yet. In order to keep the property prices stable or low, old laws must be modified to increase the supply in real estate market. Creating instruments and increasing the liquidity in Indian property market is one of the available options.

With a number of investment options available, it may become difficult for an investor to narrow down on the best. However, an individual must decide on the risk cover as per his/her income, regular expenditures, future needs, and loan liabilities. One also requires keeping his/her financial savings into consideration and the ratio of equity and debt based on risk preference.

If pondering over to buy ULIP, ensure to check out the charges. As per new guidelines, all insurance companies are needed to show the charges under the same head. It will provide the ease to compare the charges in a convenient manner.

News Published Under:   Home Loans |

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