Fixed vs Floating Home Loan Calculator
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How it works
Fixed means your rate never moves — your EMI is certain for the whole tenure. Floating moves with the repo rate: it usually starts 0.5–1% cheaper, but can overtake fixed if rates rise.
The honest way to choose is scenario maths, not gut feel. This calculator lets you stress-test floating: what if rates rise 0.5% every year? What if they stay flat? In most rate cycles, floating wins when rates are stable or falling, and fixed wins as insurance when rates are at historic lows and likely to rise.
Read the fine print either way: many Indian "fixed" home loans are fixed only for 2–5 years and then convert to floating. And floating loans let you prepay without penalty — fixed loans often charge 2–3% on prepayment, which matters if you plan part-payments.
Frequently asked questions
Which is better right now, fixed or floating?
It depends on the rate cycle. When rates are near historic lows, fixed locks in cheap money. When rates are high or falling, floating lets you ride them down. Run your own drift scenario above — that is the whole point.
Are fixed home loans really fixed for the full tenure?
Often not in India. Many lenders offer "fixed" for only 2–5 years, then reset to floating. Ask for the reset clause in writing before comparing.
What is the repo rate link?
Floating loans are now mandatorily linked to an external benchmark (usually RBI repo rate) plus a spread. When RBI cuts repo, your rate should fall within 3 months — check your loan agreement's reset frequency.
Can I switch from floating to fixed later?
Yes — lenders allow conversion for a fee (typically 0.5–1% of outstanding). It can be worth it if you believe rates have bottomed, but do the maths: the fee eats the first year's saving.
Do prepayment rules differ?
Floating-rate home loans for individuals cannot carry prepayment penalties (RBI rule). Fixed-rate loans usually can — typically 2–3%. If you plan part-payments, floating has a structural advantage.
How much does 1% rate difference cost?
On ₹50 lakh over 20 years, 9.5% vs 8.5% is roughly ₹7.6 lakh in extra interest. Rate matters far more than most borrowers realise — negotiate the spread, not just the headline.
What does the drift scenario mean?
Your assumption about where floating rates go. "+0.5%/yr" models steadily rising rates; "stays flat" models status quo. The winner flips depending on this — try the stress test before deciding.
Should EMI or tenure change when floating rates move?
Banks usually keep EMI constant and extend tenure when rates rise — which silently increases total interest. You can ask for EMI reset instead to keep the tenure fixed.
Is a lower starting floating rate always a trap?
No — it is genuinely cheaper money today. The trap is only assuming it stays there. If you would struggle with EMIs 20% higher, the certainty of fixed is worth its premium.
Can I negotiate the spread on a floating loan?
Yes — the spread over repo (your credit-risk premium) is negotiable, especially with a good CIBIL score and balance-transfer offers. Even 0.25% off saves lakhs over 20 years.