Choosing the right interest rate package

If you went out to the streets and announced that you are looking for the best home loan package to finance your brand new property, chances are that you will be swamped by offers from all directions. Each comes with their own attractive terms but which one can really give you a good deal in terms of interest rates? Before signing up with a mortgage provider, do survey the financial scene and select a package that matches your risk appetite.

The first is a fixed interest home loan whereby you’ll only need to pay a fixed interest lending rate. This guaranteed rate safeguards you from any future rate increases which means that should the interest rate be raised, you will still be paying the amount you are paying today, even a decade down the road. This sort of loan is good for those who dislike risk and prefer stability in their lives.

Next, you might consider a variable interest rate type of home loan. Basically, you pay interest rates based on an interest rate index called Base Lending Rate (BLR). If BLR goes up, so would your interest rate too. This type of loan is suitable for those who do mind a little fluctuation in interest rates.

Lastly, a bank might offer you a loan attached to an overdraft with credit facility. The designated financial institution will let you open a current account and link it with your home loan account. You are then free to withdraw any amount you need as long as it doesn’t exceed the limit set.