i. Fixed Interest Rate
A fixed interest rate for Home loans is one where the rate charged by the Bank/HFC on the loan amount is constant over the tenure of the loan. A fixed interest rate protects the borrower from a rise in home loan rates. While on the flip side, he may not benefit if the market rates were to fall.
ii. Floating interest rate
A Floating interest rate for home loans is a loan where the interest rate which is payable is linked to base rate of the company. The interest rate payable by the borrower will also rise and fall as per the fluctuation in the benchmark rate. The interest rates on housing loans are generally floating rates and the interest rate on non-housing loans are generally fixed. Each borrower based on the risk profile as determined by the company based on the model it has evolved is indicated the rate of interest, the company would charge on the loan.
While the property against which the loan is given is called the prime security, sometimes HFCs do ask for additional security in the form of another property, insurance policies, guarantor or such other securities as may be acceptable to the company. These additional securities are called collateral securities. If the prime security is adequate enough to cover the loan amount and if that security is enforceable through law, then HFCs may not insist on collateral securities.
Application form can be collected from the branches of the company or the same can be downloaded from the web site. The application form duly filled in along with other documents as specified in the application form can be submitted to the nearest branch of the company.
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