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Home loans
that offer fixed interest rates (commonly known as Islamic Home
Financing) are the most common type of fixed rate home loan for new home
buyers recently. Since the interest rates are fixed, long term
homeowners can budget their finances accordingly because they will be
safeguarded against rising interest rates.
Along with
fixed rates that are determined by the market, this type of loan
involves little risk and offers long term fixed monthly payments that
are protected from the effects of inflation.
Though appealing to most, fixed rate mortgage loans aren't for everyone.
Other types of home loans allow you to borrow more than you could with a
fixed rate home loan. If your plan to stay or invest in the property
that you are borrowing against is short in tenure, then you would
probably end up paying more in interest than you would if you chose a
variable rate home loan (commonly known as Conversional Home Loan).
Finally, with fixed interest rates, you are committed to that rate for
the duration of your mortgage tenure, even if the market interest rate
drops in future.
Keep in mind that the first offer you receive is not always the best.
Take your time, explore all options from many different lenders, and
decide which policy best suits your needs.
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