Interest rate on home loans have been increasing at a high rate. The rates have increased from 7% to 9.5 % from last one and half year. Central government has offered various benefits on home loans and the effective rates are quite attractive. Buying a house is the best option to increase your assets and if you borrow money the process becomes easier as you can repay in simple installments.
The effective rate after taking all the tax advantage is still around 7% and goes further with time.
This is when we don't take the credit for the rentals that we save when we are living in the house. But if that is also taken into consideration, the effective rate is much lower. This is the reason that though rates are increasing the demand for home loans has not been affected by the increase.
The rates keep fluctuating. They may be down in future so its advisable that you choose floating rates home loans. This will avail you the benefit of lower prices in future.
The interest rate on fixed rate home loan is higher by 1.5% than floating rate home loan. If you take the current picture in view you will realize that fixed rate home loan is 10.5% and floating rate home loan is at 9 to 9.5%. This clearly shows the benefits of floating rate home loan.
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