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What is variable home loan rates?

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0 2022-06-20T11:25:19+00:00
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It is one of the hardest decisions to purchase a house when you are availing of home loans. And most of us do not have the fortune to buy homes without taking a home loan. While availing home loan you will come across two types of interest rates: one is the fixed rate and the other is variable interest rate. Now, what is

variable interest rate? I will share the definition with you.

Avoid hefty paperworks and get home loans at the lowest interest rate.

What is variable rate loan? 

The

variable rate home loan is also popularly known as the floating rate. It is also known as an ‘adjustable-rate home loan’. In variable rate the interest rate changes at a particular time during the home loan tenure. This can happen quarterly, half-yearly, or in one financial year. Alternatively, the interest can be revised after one year of the loan anniversary. During the review period, if the market rate changes, then your loan rates would also reset again. 

If the rate resets, the tenure of the loan also gets readjusted due to the change in interest rate. So, if the rate increases the tenure of the loan would also be extended and vice-versa. This is what is variable home loan rates.

This doesn't happen with a fixed rate. If you avail of a fixed interest rate, the interest rate would remain the same along with the home loan tenure. You cannot change the fixed-rate under any circumstances.

I hope you now understand the meaning of variable interest rate.

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What Is Floating Interest Rate?

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