What are Hybrid Loans – Advantage or Disadvantage?

Money is losing its value while assets are increasing in value. Property, being the biggest asset, has many prospective buyers coming its way. It is one asset that will keep appreciating, irrespective of location and time. For regular middle-class people with a decent salary, doing this with just the down payment becomes close to impossible. This is the reason people avail of loans. However, it is very difficult to judge the fluctuating rates due to market scenario.

Two main options are taken into consideration while applying for a loan – Fixed rate and Floating rate. Loans with a fixed rate are chosen for those who do not understand and analyze the fluctuating market condition while loans with floating rate are taken by those that do. However, some people might consider both to be profitable at some point of time; hybrid loans are for those people.

A Hybrid Loan gives you the combination of a fixed and floating rate of interest on your home loan. Usually, a fixed interest rate is charged for the first few years. The outstanding is then carried forward and charged with floating rate of interest according to the market scenario. Of-late, this type of loan has become very popular because of sky high home loan rates.

Hybrid Loans are mainly attractive to job goers who are rather young and have relatively lower salaries. It is ideal for them as the monthly rate of interest is fixed for the first few years, thereby helping them to maintain finances better and save money for the future. After a few years, when the person is at a better post and earning more money, they will be able to pay the floating rate of interest with ease, thereby increasing their EMI accordingly.

Check and compare from below given 3 banks what interest rate they are offering and then take your final decision.

• PNB Home Loan interest rate,
  
• ICICI home loan interest rate,
  
• HDFC home loan interest rate
  

Advantageous in most cases, it is essential to read the fine print before applying for a loan of this sort. There may be a few penalties due to non-payment of interest, and they may dent your pocket more than regular loans. It is a must to keep an active track of the interest rate scenario.