Which type of Home Loan Fixed or Flexible Rate is better..?

Question

I want Loan of around 15 lack for 10-15 years

Answer 1

the present trend is increase in the rate of interest. it is better to opt for fixed interest rate. but some banks offer both fixed and floating rate. in that case it is better to opt for floating rate. but it is always good to read the fine printing of the terms and conditions of the bank. they vary from one bank to another.choose the bank which offers both floating and fixed and gives option to convert from one rate of interest to another.

Answer 2

For a fixed rate the rate remains constant and therefore is only good if you expect the rates to be going up. If the rate is flexible it changes every time the rate changes and is therefore only good if the rate is expected to fall. Pick the bank that allows you to change from fixed to flex and vice versa. After that study the economic climate and decide whether the rates are likely to go up or down and then take the fixed rate or flexi rate accordingly. History tells you that it is not correct to assume the rates will always go up as many times the rates have taken a beating. Like only in late 80s the rates were as high as 18% but today the rate is below 8%!! If unsure at any time pays to take a flexi rate so that you are not tied down to a rate that may be hard to swallow. With fixed rate you are gambling that rate will go down.
Hope this helps.

Answer 3

Fixed rate is the rate which will be fixed for the entire loan tenure. Flexible rate varies according to the market. As on date flexible rate is 9.5% to 11% where as 2 yrs back it was 7.5%. So those who had applied loan @ 9% fixed at that time are lucky today.
Fixed rate though a little high is better.

Answer 4

A fixed rate mortgage (FRM) is a mortgage loan where the interest rate on the note remains the same through the term of the loan, and is initially based on an index. This is done to ensure a steady payment amount for the borrower. Other forms of mortgage loan include interest only mortgage, graduated payment mortgage, adjustable rate mortgage, negative amortization mortgage, and balloon payment mortgage. Please note that each of the loan types above except for a straight adjustable rate mortgage can have a fixed rate portion to their loan. A Balloon Payment mortgage for example can have a fixed rate for the term of the loan followed by the ending balloon payment.

This payment amount is independent of the additional costs on a home sometimes handled in escrow, such as property taxes and property insurance. Consequently, payments made by the borrower may change over time with the changing escrow amount, but the payments handling the principal and interest on the loan will remain the same.

Fixed rate mortgages are characterized by their interest rate, amount of loan, and term of the mortgage. With these three values, the calculation of the monthly payment can then be done.

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An adjustable rate mortgage (ARM), variable rate mortgage or floating rate mortgage is a mortgage loan where the interest rate on the note is periodically adjusted based on an index. This is done to ensure a steady margin for the lender, whose own cost of funding will usually be related to the index. Consequently, payments made by the borrower may change over time with the changing interest rate (alternatively, the term of the loan may change).[1] This is not to be confused with the graduated payment mortage, which offers changing payment amounts but a fixed interest rate. Other forms of mortgage loan include interest only mortgage, fixed rate mortgage, negative amortization mortgage, and balloon payment mortgage. Adjustable rates transfer part of the interest rate risk from the lender to the borrower. They can be used where unpredictable interest rates make fixed rate loans difficult to obtain. The borrower benefits if the interest rate falls and loses out if interest rates rise.

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Excerpts above from sources below:


PERSONAL NOTE: I prefer the stability of a fixed rate mortgage because the adjustable rate mortgage (flexible) can pack a punch if the interest rates go up significantly... with a fixed rate mortgage, our rate doesn't change irregardless of the change in the interest rates. If it (interest rate) dropped significantly say 2 or 3 points, we can refinance the loan and take advantage of the lower interest rate, too.

Answer 5

If you are employee of any of the organisation including Government it will be better to opt for fixed rate as the earnings for you are almost constant based on the GDP. Hence it is better not to take any chances. If you are into business you can go gor Flexible rate.

Answer 6

There aren't any extra subprime loans and also you shouldn't want one even with in the adventure that they nonetheless existed. little doubt, you qualify for FHA. you want 3.50% down. and there is not any reason to get an FHA arm. The charges aren't any further that diverse. Get a demanding and quick cost. you want to exhibit the interior most loan agency that you've the down charge now, no longer ninety days from now. various human beings will be operating very demanding over the subsequent 60 to ninety days to get you the abode you want. and that all of them will want to be particular as conceivable that the transaction is going with the help of. widely used is making particular you've the money for the down charge and shutting prices. the seller can cover various the last prices, notwithstanding it ought to be sparkling ahead. you may ought to exhibit the underwriter that the money is contained in the commercial corporation or someplace else earlier your transaction strikes ahead. The itemizing and promoting realtor will want to be effective of this also. otherwise they are going to locate yet another customer. The tax credit become already prolonged.

Answer 7

Fixed rate is much better