Choose a home loan fixed interest rate or floating is better.

The decision to choose a home loan is a big decision for many people because it means that we are obliged to pay back period is relatively long. The reason is because it is considered a high-value assets. It is high compared to most other asset prices, house also has a one million baht, up to several million baht and assets that we would not buy more frequently.

Therefore, choosing a home loan then. We think that the bank will approve or disapprove otherwise would not. But we have to factor in choosing a home loan in our mind as well. One of the factors considered most important feature of a home loan is the subject of interest. The interest will determine the amount of money we have to pay back the loan with the bank, the house is more or less it. And we have to balance all night for the duration of the loan is more or less how we recovered with the principal.


This is why we need to compare the interest rates of home loan borrowers of banks that offer. Lower interest balance we will have to pay back to the bank, the less the interest cost. However, interest on bank loans presented in the present. It's quite complicated enough. Sometimes we can not get a straight comparison.


Mortgage interest of the two banks together are fixed (Fixed rate) and floating (Floating rate) will first explain the fixed and floating interest before the loan as well.


Fixed (Fixed Rate) The interest rate of the Bank as a number specific to them, such as 4% or 5% annual fixed interest to both lenders and borrowers know the amount of interest that will be received or not. pay a certain amount It is defined and is not changed at all as specified in the loan agreement.


Floating (Floating Rate) means the rate of interest is not defined as a specific reference to interest that is likely to change up or down according to conditions of the economy. Floating This allows lenders and borrowers do not know the amount of interest to be paid, or certainly not in advance. But had to wait around a day to receive or pay interest. The interest rate used as a reference to calculate the interest on the course again.


For floating commonly used in the United States, it will be MLR, MOR and MRR will differ for each bank. Each bank will have a floating interest rate announcement out periodically. When changes are made, it will be announced later. By reference to the interest rate announced by the Bank of Thailand. An adjustment to interest more It is based on a floating interest If the adjustable interest rates This was followed by floating down.


In case of home loans used it as MLR (Minimum Loan Rate), the interest rate that banks use for loans to large customers as well as lending a certain period. Customer financial history and have sufficient collateral Moreover, some banks were using the MLR MRR (Minimum Retail Rate) is the interest rate that is higher than MLR banks in lending to retail customers as well.


Most, if a floating rate of MLR or MRR time banks will offer interest to customers will have a positive or negative suffix, such as MLR + 1% or MRR + 2%, which is 1% or 2% here. plus more or less It depends on the creditworthiness of individual customers that are reliable and have the ability to repay much.


Now, back to our home loan as well. If we take a home loan. We should know better interest. The interest on fixed or floating interest. Because I know that a home loan is a long-term credit. Perhaps as long as several decades. Whether the bank, he did not want to risk the long-term interest in this. Seen as a home loan, it usually does not set a fixed interest rate throughout the life of the contract. If the banks do that when market interest rises. It is a chance to get a higher interest as well.


Banks usually offer two types of interest are in the early stages of repayment. It will be fixed In the short term the bank will likely see interest. The cost of capital in short-term bank they can plan. But in time, as far as more than one year or three years, it will leave a floating interest.


As a home loan. If you look at the current interest rate environment is very low in many years ago. Many people just come out and say that is the minimum point of interest and not knowing where to go lower then. Choosing a fixed interest therefore seems to be the better choice. The chance to be in the future, but rising interest only. If possible, you should choose a fixed interest banks offer as long as possible. However, you must compare the interest rate of each bank. Some banks even offer a lower interest rate in the first period. But just a short time only, but later during the floating. Plus the percentage may be higher. The interest You should look at the whole period of the loan agreement.


For example, to visualize Home Loan Bank 1-3 years fixed rate at 5.25% after that MRR - 2.025%, while the Bank of Thailand's first year, then 3.25% at MLR -0.25%.


• Bank 1-3 years 5.25% next year, I think MRR - 2.025% MRR of the Bank stood at 7.775%, it is the third year the interest is 7.775% - 2.025% = 5.75% (equivalent to compare. have But the real interest is to be watched in the next three years).


• Bank of Thailand first year, 3.25% next year, I think MLR - 0.25% current MLR of Bank of Thailand at 6.275% - 0.25% = 6.025% (equivalent to comparable. But the real interest is to wait for the next one year ahead).


If you compare this to make it more attractive than the interest of the Bank. For one fixed idea in the period over the three years, but the Bank of Thailand, the second year it was 6.025%, which is more than the fixed interest of the Bank, we have to spend another two years, two years after that. 3 to the floating of the Thai Military Bank was less over the life of the contract. Overall, the interest to be paid over the life of the home loan is lower than the Bank of Bank of Thailand.


In contrast, if the market interest is likely to be reduced. We should choose a floating interest rate. It gives an opportunity to get up when the market interest rate is lower. But we also know that interest rates will fall further this situation will recur or not. Now it is known that extremely low interest already.


Source: https://www.tmbbank.com/rates/loan
http://www.ktb.co.th/ktb/Download/rateFee/RateFeeDownload_4048loan_27_04_59.pdf