Loan on Floating Interest Rate and Fixed Interest Rate Difference

Pros and Cons of Floating Interest Rate Loans

✅ Pros:

1. Lower Initial Rates:
   Usually cheaper than fixed-rate loans in the beginning.

2. Benefit from Market Trends:
   If market rates fall, you save on interest and EMIs.

3. Lower Prepayment Charges:
   RBI guidelines have reduced or eliminated prepayment penalties for floating rate home loans.

❌ Cons:

1. Unpredictable EMIs:
   Your monthly payments could rise, affecting your financial planning.

2. Higher Risk:
   Floating rates can be volatile during inflation or repo rate hikes.

3. Uncertain Total Interest Payable:
   Because the rate can change, you can’t predict the exact interest you’ll end up paying.

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