Floating Loan rates

Type of loan whose interest rate (and, therefore, monthly installment amount) fluctuates according to the rise or fall in the market interest rates.

Depending on a host of factors, rates offered by other home loan players, how desperate the company is to get more customers, the current cash flow situation in the company and other monetary requirements', a home loan player will decide on the interest rate.

For instance, the home finance company may say that for a month, the interest rate will be less 1% less than the base rate. After this scheme, it will switch to the base rate.Or if interest rates rise suddenly for a short period of time, then the rate may be 1% more than the base rate for that period only.

Keep tab of the EMI:

Call up your bank at periodic intervals to check if there has been a change. No doubt, the bank will intimate you but if they don't, or their intimation letter does not reach you. You will be expected to pay a higher EMI with no warning.