A fixed interest rate for Home loans is one where the rate charged by the Bank/HFC on the loan amount is constant over the tenure of the loan. A fixed interest rate protects the borrower from a rise in home loan rates. While on the flip side, he may not benefit if the market rates were to fall.

A Floating interest rate for home loans is a loan where the interest rate which is payable is linked to base rate of the company. The interest rate payable by the borrower will also rise and fall as per the fluctuation in the benchmark rate. The interest rates on housing loans are generally floating rates and the interest rate on non-housing loans are generally fixed. Each borrower based on the risk profile as determined by the company based on the model it has evolved is indicated the rate of interest, the company would charge on the loan.