Home Loan Rates

There are mainly two types of home loan rates available in the home loan market – fixed rate and adjustable rate. Apart from these two loan rates, there are many other types of home loan rates that are designed to meet the requirements of all types of borrowers.

In case of fixed rate home loans, the rate of interest does not change during the loan period and the installment amount remains the same throughout the entire loan period. On the other hand, in case of the adjustable rate home loans, the loan interest rate is adjusted at regular intervals. In case of the adjustable rate home loans, the loan is linked to an economic index and the loan rate is adjusted according the changes in the index.

The fixed rate home loans are more suitable for the first time home buyers. The fixed rate loans stabilize the monthly repayments of the borrowers and hence the borrowers can plan for their repayments at the very outset. But in case of the variable rate home loans the loan payments may either go up or down according to the market trend. The adjustable rate may be beneficial when the loan rate keeps falling thus reducing the monthly installment substantially. On the other hand, in case of the fixed rate home loans, the borrowers can be safe if there is a high rise in the loan interest rate.

Discount rate home loans and capped rate home loans are the other two types of the home loans available in the home loan market. In case of the discounted rate home loans the borrowers can enjoy a reduced payment for the fixed interval of time. As the fixed period gets over, the loan rate increases to the national base rate. With the capped rate home loans, the lenders cap the home loan rate to a specific amount that never allows the interest rate to cross the specified level for the fixed period of time.

Apart from fixed rate home loans and adjustable rate home loans, there are some other types of home loans that come with different types of home loan rates. These are – balloon loans, negatively amortizing loan, graduated payment home loans, fixed period adjustable rate home loans, buydown home loans and many more

Home Loan Rates and Types
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