Is the Fixed-cum Floating Interest Rate Home Loans scheme good for me ?

Let’s understand what Fixed-cum Floating Interest Rate Home Loans schemes are all about and whether you should go for them.

The PSU lenders now offer fixed interest rates for the first 3-5 years before converting them into the prevailing floating rate at the time of such conversion. This is a slightly different product for consumers and hence they have some difficulty in comparing it to the regular floating products of the private sector lenders.

Flipside

If you just compare the average rates you will find that floating rates offered by private lenders are better. Also the loan eligibility is little higher if that is a consideration for you.

Advantages

However if rates rise dramatically in next 3-5 years then at least with PSU lenders you have the comfort of fixed interest rates for 3-5 years before being exposed to the vagaries of floating rate of interest. This is particularly relevant for the people who have normally tight budget for the first few years after they buy a home. Administratively PSU lenders have improved substantially but private sector lenders clearly score on this front. Another factor for consideration could be administrative ease of getting the loan.