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Rule # 6: Fixed or floating, there is no substitute for vigilance
December 15, 2008
Even when opting for 'fixed interest', remember that in some cases, it may remain fixed only for a certain period of time, as the bank may have the right to arbitrarily change even the so called 'fixed rate'. So, probe further and read the fine print before you sign on anything.
Like a majority of consumers, if you have signed a floating rate loan, check whether the rates of your chosen lender had floated down in the years when interest rates were dropping like a stone.
To know whether your lender offers 'transparent floating rates', ask for and check the bank's floating rate records from 2002-2003, when interest rates were going down. This is a fair indicator of what you can expect as (not if) and when the interest rates start moving down and the time comes for the bank to pass on the benefit to you.
Also see: 7 common financial mistakes
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