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Everything You Should Know About Fixed Rate of Interest on Home Loan
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.
What is 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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Benefits of Fixed Rate of Interest
1. Certainty
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.
2. Low-Interest Rates
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.
3. Repayment Tenure
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.
4. Maintaining Budget
With fixed interest rates you can manage your monthly EMI and other financial budget very well.
5. Financial Security
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.
Fixed Interest Rate Home Loans in India 2025
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. |
Save for a Home the SIP Way!
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 (%) 2024 (%) DSP World Gold Fund Growth ₹34.0465
↑ 0.59 ₹1,202 500 17.9 37.7 73.5 35.4 8.2 15.9 SBI PSU Fund Growth ₹31.0237
↑ 0.07 ₹5,427 500 3.5 7.1 -7.6 32 29.8 23.5 Invesco India PSU Equity Fund Growth ₹61.19
↓ -0.29 ₹1,439 500 5.2 10.1 -8.8 31.3 27.6 25.6 Franklin India Opportunities Fund Growth ₹247.008
↓ -2.29 ₹7,200 500 4.8 4.8 1.5 30.2 29.1 37.3 HDFC Infrastructure Fund Growth ₹46.767
↓ -0.20 ₹2,591 300 6.1 7.9 -2.2 29.8 34.1 23 ICICI Prudential Infrastructure Fund Growth ₹190.55
↓ -0.94 ₹8,043 100 6.2 7.6 0.6 29.5 35.9 27.4 Nippon India Power and Infra Fund Growth ₹334.107
↓ -4.29 ₹7,620 100 4.6 6.2 -7.6 29.1 30.6 26.9 Franklin Build India Fund Growth ₹138.945
↓ -1.09 ₹2,968 500 6.1 8.1 -1 28.8 32.8 27.8 Bandhan Infrastructure Fund Growth ₹49.006
↓ -0.53 ₹1,749 100 6.1 5.3 -10.9 27.9 32.9 39.3 LIC MF Infrastructure Fund Growth ₹47.9945
↓ -0.80 ₹1,053 1,000 11.4 8.1 -4.7 27.6 31.2 47.8 Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 7 Aug 25 Research Highlights & Commentary of 10 Funds showcased
Commentary DSP World Gold Fund SBI PSU Fund Invesco India PSU Equity Fund Franklin India Opportunities Fund HDFC Infrastructure Fund ICICI Prudential Infrastructure Fund Nippon India Power and Infra Fund Franklin Build India Fund Bandhan Infrastructure Fund LIC MF Infrastructure Fund Point 1 Bottom quartile AUM (₹1,202 Cr). Upper mid AUM (₹5,427 Cr). Bottom quartile AUM (₹1,439 Cr). Upper mid AUM (₹7,200 Cr). Lower mid AUM (₹2,591 Cr). Highest AUM (₹8,043 Cr). Top quartile AUM (₹7,620 Cr). Upper mid AUM (₹2,968 Cr). Lower mid AUM (₹1,749 Cr). Bottom quartile AUM (₹1,053 Cr). Point 2 Established history (17+ yrs). Established history (15+ yrs). Established history (15+ yrs). Oldest track record among peers (25 yrs). Established history (17+ yrs). Established history (19+ yrs). Established history (21+ yrs). Established history (15+ yrs). Established history (14+ yrs). Established history (17+ yrs). Point 3 Rating: 3★ (upper mid). Rating: 2★ (bottom quartile). Rating: 3★ (upper mid). Rating: 3★ (lower mid). Rating: 3★ (lower mid). Rating: 3★ (bottom quartile). Rating: 4★ (upper mid). Top rated. Rating: 5★ (top quartile). Not Rated. Point 4 Risk profile: High. Risk profile: High. Risk profile: High. Risk profile: Moderately High. Risk profile: High. Risk profile: High. Risk profile: High. Risk profile: High. Risk profile: High. Risk profile: High. Point 5 5Y return: 8.19% (bottom quartile). 5Y return: 29.83% (lower mid). 5Y return: 27.56% (bottom quartile). 5Y return: 29.08% (bottom quartile). 5Y return: 34.10% (top quartile). 5Y return: 35.89% (top quartile). 5Y return: 30.64% (lower mid). 5Y return: 32.79% (upper mid). 5Y return: 32.92% (upper mid). 5Y return: 31.22% (upper mid). Point 6 3Y return: 35.39% (top quartile). 3Y return: 32.01% (top quartile). 3Y return: 31.34% (upper mid). 3Y return: 30.21% (upper mid). 3Y return: 29.80% (upper mid). 3Y return: 29.47% (lower mid). 3Y return: 29.12% (lower mid). 3Y return: 28.76% (bottom quartile). 3Y return: 27.94% (bottom quartile). 3Y return: 27.63% (bottom quartile). Point 7 1Y return: 73.50% (top quartile). 1Y return: -7.64% (bottom quartile). 1Y return: -8.75% (bottom quartile). 1Y return: 1.53% (top quartile). 1Y return: -2.17% (upper mid). 1Y return: 0.64% (upper mid). 1Y return: -7.56% (lower mid). 1Y return: -1.01% (upper mid). 1Y return: -10.90% (bottom quartile). 1Y return: -4.70% (lower mid). Point 8 Alpha: 1.97 (top quartile). Alpha: 0.60 (upper mid). Alpha: 0.81 (top quartile). Alpha: -1.73 (bottom quartile). Alpha: 0.00 (upper mid). Alpha: 0.00 (lower mid). Alpha: -7.82 (bottom quartile). Alpha: 0.00 (lower mid). Alpha: 0.00 (bottom quartile). Alpha: 0.77 (upper mid). Point 9 Sharpe: 1.80 (top quartile). Sharpe: -0.23 (lower mid). Sharpe: -0.23 (lower mid). Sharpe: -0.09 (upper mid). Sharpe: -0.23 (upper mid). Sharpe: 0.01 (top quartile). Sharpe: -0.41 (bottom quartile). Sharpe: -0.29 (bottom quartile). Sharpe: -0.29 (bottom quartile). Sharpe: -0.02 (upper mid). Point 10 Information ratio: -0.35 (bottom quartile). Information ratio: -0.28 (bottom quartile). Information ratio: -0.15 (bottom quartile). Information ratio: 1.71 (top quartile). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (upper mid). Information ratio: 1.16 (top quartile). Information ratio: 0.00 (lower mid). Information ratio: 0.00 (lower mid). Information ratio: 0.45 (upper mid). DSP World Gold Fund
SBI PSU Fund
Invesco India PSU Equity Fund
Franklin India Opportunities Fund
HDFC Infrastructure Fund
ICICI Prudential Infrastructure Fund
Nippon India Power and Infra Fund
Franklin Build India Fund
Bandhan Infrastructure Fund
LIC MF Infrastructure Fund
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.
Conclusion
When applying for a loan, make sure to read all the terms and conditions carefully.
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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