Fixed and floating The most basic types of loans are fixed and floating. In a fixed rate loan, the rate of interest will not change, rega...
Fixed and floating
The most basic types of loans are fixed and floating. In a fixed rate loan, the rate of interest will not change, regardless of how the economy fares ('pure' fixed loan). Here, a borrower knows what his interest rate is going to be. On the flip side, he has to pay a premium for this predictability, in the form of a higher interest rate.
Floating rate loans have interest rates that adjust periodically during the tenure. It is cheaper by a few points as compared to fixed. So, a borrower starts off with a lower interest rate than a regular fixed rate loan.
Site loan
Some banks give loans for the purpose of purchasing land. The borrower can use it to construct a house, or simply treat it as an investment.
Home conversion loan
Suppose a borrower has taken a home loan. He later finds that there is a space crunch and wants to move to a larger home. The new home that he intends to purchase will cost more. A home conversion loan enables him to transfer the existing home loan to a new account including the extra amount required. Hence, the need to prepay the old loan does not arise.
Home improvement loan
This facilitates all sorts of internal and external repairs and other structural improvements like painting, waterproofing, plumbing and electric works, tiling, flooring, and installing grills. If the borrower wants to extend his existing home, he must seek a home extension loan.
The most basic types of loans are fixed and floating. In a fixed rate loan, the rate of interest will not change, regardless of how the economy fares ('pure' fixed loan). Here, a borrower knows what his interest rate is going to be. On the flip side, he has to pay a premium for this predictability, in the form of a higher interest rate.
Floating rate loans have interest rates that adjust periodically during the tenure. It is cheaper by a few points as compared to fixed. So, a borrower starts off with a lower interest rate than a regular fixed rate loan.
Site loan
Some banks give loans for the purpose of purchasing land. The borrower can use it to construct a house, or simply treat it as an investment.
Home conversion loan
Suppose a borrower has taken a home loan. He later finds that there is a space crunch and wants to move to a larger home. The new home that he intends to purchase will cost more. A home conversion loan enables him to transfer the existing home loan to a new account including the extra amount required. Hence, the need to prepay the old loan does not arise.
Home improvement loan
This facilitates all sorts of internal and external repairs and other structural improvements like painting, waterproofing, plumbing and electric works, tiling, flooring, and installing grills. If the borrower wants to extend his existing home, he must seek a home extension loan.
