Which interest option to select for LIC Home loan

POSTED BY johnpal ON December 20, 2012 12:16 pm COMMENTS (4)

Hi Manish,

I am planning to take LIC home loan for 40L for 15 years. As per LIC associate i got following options,

 

10.25% interest fixed for 2 years then floating

10.7% interest fixed for 3 years then floating

10.95% interest fixed for 10 years then floating

11.15% interest fixed for 5 years then floating

I am planning to close the loan in 10 years.
Which one would you sujjest ?
And also i heard that interest rates are going to reduce in next couple of months can any body comment on this?
Quick response will help

 

– Pal

4 replies on this article “Which interest option to select for LIC Home loan”

  1. Credexpert says:
    December 21, 2012 at 7:23 pm

    Dear John Pal,

    Taking a call on interest rate movements, specially over such long periods is always a “guesstimate”. If you are a salaried person then it is always better to play safe and go for a fixed rate, so you are insulated against future volatility – specially upward movements. However, that eliminates any upside, if rates go up. Seems like interest rates may go down in the next few months, but that would be short term and who is to say what will happen later.

    I would suggest, take the two year fixed at 10.25% and then consider switching / prepaying after 2 years depending on market rates.

    Regards,
    Credexpert

    Reply
  2. BanyanFA says:
    December 20, 2012 at 7:26 pm

    Hi,
    I would propose going with completely flexible interest rates.
    Check out the following link for detailed rationale behind this.
    http://insight.banyanfa.com/fixed-or-floating-interest-loans/

    Reply
  3. Biswa Singh says:
    December 20, 2012 at 5:43 pm

    As the home loans are less now and its highly expected to go down in future its best to go with the normal floating rate.

    Reply
  4. Sachin Chavan says:
    December 20, 2012 at 12:40 pm

    10.95% interest fixed for 10 years then floating- looks the best choice per my understanding

    Reply

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