Term & Rate of Interest for a Home loan to be chosen

Term & Rate of Interest for a Home loan to be chosen

Term: A maximum term of 25 years is allowed for mortgage but in a study its shows that most of the Indian borrower prefers to go for 20 years term period. The general consensus seems like if you can afford a 10-15-year loan, you should go for it. The interest rate will be lower, you own your home in at an early stage, and the payments aren't actually that much higher. Just for an example if you choose a term of 15 years instead of 20 years yours EMI will be higher by 10.30% than what you will be paying for 20 years but your term gets reduced by 25%.

Interest Rate: The rate is suggested to be a fixed rate of interest. The fixed rate of interest seems to be a bit higher than floating at the initial stage but it shows in a study that floating rate of interest becomes higher than then the fixed rate of Interest over the period after it goes for 2-3 reviews by the bank/company. The floating rate looks to be a lucrative at the initial stage but banks/company takes it to a higher rate by changing its policies at the time of each review of Interest. Normally floating Interest rate goes for a review at every 3 months interval.

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