Employment rate in Kerala is expected to grow at a fast rate for the next 5 -10 years. This is due to have a further positive effect on the real estate of the state especially in the cities like Cochin and Trivandrum where the employment opportunities will be concentrated.
Buying a Kerala Apartment can be the most important investment for anyone. There are number of factors to consider while investing in residential property. The choice of home loans is one such. There are different financial institutions offering different schemes.
The interest rates on the loans are a major consideration while choosing a particular scheme or institution. A fixed rate is one where the interest rate is the same throughout the tenure of the loan. There are also products where ‘fixed’ rate remains fixed for a particular time span.
Fixed rate loans are always preferable if the interest rates are slated to go up in the near future. It can also make budgeting easier due to the fact that all payments should for the same amount. However, fixed rates have their own limitations. They attract higher premium compared to floating rates.
If you have plans to borrow with repayment tenure of 20 years, as there is pre-pay option, in a few years, you should go for the fixed rate. However, if you can repay the loan within 6 months or so, you are advised to go with floating rate.
Floating rate loans are sensible when interest rates are declining. They are closely associated with the market rate and are therefore subject to change at periodical intervals. Banks review their floating rates once every quarter sometimes even monthly. The period can vary across HFCs.
Often with a floating rate, there is also longer tenure, which translates to financial commitment for a long term. Therefore, floating rate loans demand a strong and well thought out financial planning.
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