|
Confused in the Home Loan jargon? Our glossary
will help you in understanding the basic loan related terms.
Browse through the glossary or serach for a term through the
menu to resolve any doubts.
Glossary of Home Loan terms
F
Facility
Another term used to describe a loan or credit availability.
Flat Rate
Flat rate is the percentage representation of the amount
of annual interest on the total loan amount.
Floating Rate
In floating rate, interest rate on the loan depends on the
Prime Lending Rate (PLR) fixed by the RBI. Floating rate
change usually happens as frequently as once in six months.
A borrower benefits with the fall of the PLR, and loses
if it rises. In case of a fall in interest rates your payments
remain the same for every month and the HFC will refund
some of your EMI cheques and effectively compensate you
by reducing the tenure of the loan. However, the reverse
happens if the PLR rises, much to your disadvantage.
Fixed rate
Fixed rate interest is one where the rate charged by the
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.
|
