Fixed vs floating rate

A fixed-rate loan keeps the same interest rate for a set term, while a floating-rate loan moves with an external benchmark, usually the repo rate. Floating rates start lower and fall when the benchmark falls, but your EMI (Equated Monthly Instalment) or tenure rises when it climbs. Fixed rates buy certainty at a premium, and many so-called fixed home loans are only fixed for an initial period before reverting. RBI bars foreclosure charges on floating-rate home loans to individuals; fixed-rate loans can still carry them. Sanction is at the lender's sole discretion.