Dharmesh is a 25-year-old man with a stable job. He moved to Mumbai in order to look for a job and settle down with his family. After completing two years at his workplace, Dharmesh decided to buy a house so that he can ask his parents to move in with him. With excitement, he started scrolling through various apartment listings online and came across a beautiful and cosy home in Mumbai. He knew then and there- this was the house he was looking for.
Soon, he set up an appointment with an agent who took him for a tour through the house. Dharmesh was in love with light-coloured walls, daintily painted inner spaces and the wide and open kitchen space. He knew his family would fall in love with the home.
However, Dharmesh did not have enough cash to buy the house and decided to apply for a Home Loan. While researching for the best home loans online, he came across something he didn’t know much about- The fixed rate of interest.
Fixed-rate of interest is exactly as it sounds- it’s a fixed rate. This means that the rate of interest will remain unchanged on the loan you have opted for. This rate of interest remains fixed for the tenure of the loan or at least a part of the tenure. The details will be made clear during the time of the loan application.
In case you are buying a home, the loan repayment tenure is usually 30 years. The rate of interest will remain constant throughout. However, this is only advantageous when the Market conditions are trending downward.
Fixed-rate of interest is an attractive option for borrowers who don’t want to take the risk of changing interest rates. Borrowers usually take up this option when the rate of interest is low.
For instance, if Dharmesh opts for a home loan with a fixed rate of interest when the interest rate in the market is pointing downward, he will be making a profitable investment. The rate of interest will remain constant for him for the loan repayment tenure he chooses. This will not change even if there is Inflation.
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The major advantage of a fixed rate of interest is the Factor of certainty. The rate of interest remains unchanged for the loan period. This will help you plan your self financially and maintain the standard of living.
Borrowing loan during times of low-interest rates can be extremely beneficial since the rate will remain constant throughout your loan period though it may undergo changes in the period. You could save money with the loan repayment and the interest rate.
Fixed Interest Rate is beneficial even with longer loan repayment tenures. Even if changes occur in the real-time rate of interest, you will not have to worry for the fixed loan period. The rate of interest for you will remain unchanged no matter what happens.
With fixed interest rates you can manage your monthly EMI and other financial budget very well.
Since fixed-rate of interest offers financial security. This means that you don’t have to worry about losing more money even if market rates rise.
Two major banks in India offer home loans with fixed interest rates. They are HDFC Bank and Axis Bank.
Note: HDFC bank offers an interest rate based on the quantum of the loan. This interest rate is subject to a fixed period of two years. The interest rate will change thereafter.
|Bank||Rate of Interest|
|HDFC Bank||7.40% p.a- 8.20% p.a|
|Axis Bank||12% p.a.|
If you don’t wish to opt for a home loan, you can still save money and buy the house of your dreams with the Systematic Investment plan (SIP). SIP gives you the freedom to save money regularly with ease. You can plan your budget and savings with SIP and also expect great returns. Save monthly and buy your dream home with SIP today!
Fund NAV Net Assets (Cr) Min SIP Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) 2022 (%) Nippon India Small Cap Fund Growth ₹117.791
₹34,469 100 17.9 29.5 36 42.1 21.8 6.5 L&T Emerging Businesses Fund Growth ₹59.5566
₹10,766 500 15.7 25.9 31.5 40.1 17.1 1 HDFC Small Cap Fund Growth ₹101.791
₹21,067 300 16.4 28.1 39.6 38.9 17.7 4.6 ICICI Prudential Infrastructure Fund Growth ₹120.77
₹2,917 100 13.6 21.6 36.5 38.7 19.1 28.8 Franklin India Smaller Companies Fund Growth ₹120.688
₹9,104 500 15.4 26 37.2 37.8 15.8 3.6 DSP BlackRock India T.I.G.E.R Fund Growth ₹205.603
₹2,348 500 19.9 27.7 36.5 37.6 17.4 13.9 HDFC Infrastructure Fund Growth ₹30.698
₹781 300 23.8 34.9 41.2 37 11.5 19.3 ICICI Prudential Smallcap Fund Growth ₹65.13
₹6,511 100 14.4 23.6 25.3 36.6 20.1 5.7 SBI Contra Fund Growth ₹267.29
₹13,461 500 11.9 17.5 23.9 36.1 18.7 12.8 Kotak Small Cap Fund Growth ₹193.889
₹11,597 1,000 13.5 19.8 18.7 36 20.8 -3.1 Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 22 Aug 23
Funds mentioned are considering best
CAGR returns for over 3 years and fund having atleast have market history (Fund age) of 3 year and have minimum 500 Crore of asset under management.
When applying for a loan, make sure to read all the terms and conditions carefully.
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