What is floating rate loans in Home loan?

Q: Reserve Bank of India has recommended removing pre-payment penalty on floating rate loans. What is floating rate loans in Home loan?

Kanthi Sridhar, Bangalore

29th September 2011

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floating rate loans in home loan

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Dorene Zeller,

15th January 2015

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This means that any change in the base rate need not result in an immediate change in the floating interest rate on existing loans. Floating rate loan agreements can have interest rates reset monthly, quarterly, half-yearly, etc.

Bhaskaran Reddy,

17th May 2014

Comment

A floating interest rate, also known as a variable rate or adjustable rate, refers to any type of debt instrument, such as a loan, bond, mortgage, or credit, that does not have a fixed rate of interestover the life of the instrument. Floating interest rate home loans are tied up to a base rate plus a floating element thereof. So, if the base rate varies the floating interest rate also varies.

Rakesh, Bangalore

29th September 2011

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