FD (Fixed Deposit) is financial assistance that pays a fixed amount of interest until the provided redemption date. FD offers higher rates of interest compared to a savings account. An FD promises an assured return which can vary according to the tenure. At present, banks are offering 7% to 8 % returns based on the mandate.
Premature withdrawals can affect the profits. The duration of FD is flexible, i.e., it ranges from a minimum tenure of 7 days to a maximum tenure of 10 years (The tenure varies from bank to bank). Investments in other financial assistance like mutual funds, and gold ETFs might give you higher returns, but they are fickle.
If you urgently need money due to some liabilities, the bank also provides loans against your FD with an interest rate ranging from 60% to 90%.
Features of Home Loan
Individuals often believe that Home Loans can help you fund your dream home purchase easily. Here’s a lowdown on the best features of Home Loan:
- Flexible Repayment: If you have some extra money with you, you have the option to repay more money at a time to abate your rate of interest and your loan closure date.
- Redraw: You can redraw the repaid amount if you need cash.
- Flexible Rate: You can switch the rate of your loan between variable rate and fixed rate or split into both to manage the mortgage efficiently.
- Tax Deduction: For encouraging people to buy their own homes, the government has imposed a tax deduction on the principal amount as well as interest rates on home loans.
Features of Fixed Deposit
Investing in Fixed Deposits enables you to set aside a large corpus, which can be used for re-investing and growing your savings. You can use these savings for buying your dream home. Here are some of benefits of investing in Fixed Deposit:
- Higher Interest: People can get higher interest on their extra savings in a fixed deposit account.
- Renew options: The amount to be put in a fixed deposit can be done only once, but the account can be renewed after the tenure.
- Interest Credit: The interest of the FD account is credited to the person’s savings account monthly or quarterly according to the requirement.
- Guaranteed Return: Unlike other financial investments, you get a guaranteed return of your investments in an FD.
How is FD a better choice?
Almost every bank offers the facility to open an FD account online wherein you can check the FD interest rates and your income benefits using an FD interest calculator provided by the bank. An FD account promises you a guaranteed return to your investment unlike home loans and other financial investments. You can determine the tenure of your FD account ranging from 7 days to 10 years.
You can also have multiple FD accounts in one bank at the same time with different tenures. The FD rate interests are comparatively less than the interest rate of a home loan. You can avail a loan against your FD account where you can use a 75% of the FD amount. A loan against your FD gives your much more benefits than a regular loan can provide.
Benefits of owning a home using FD
If you avail a home loan for owning your own house, you will have a liability till your chosen maturity date. While you if, you avail a loan against your FD you have the benefits of getting more profit and interests compared to standard loans. Choosing between the both entirely depends from person to person.
You can also avail for personal loans from trusted financial providers that offers many beneficial opportunities. If FD is your choice, make sure to compare the FD rates among trusted banks using the FD calculator.