[India] Home Loan - some doubts

Hi, I am planning to take home loan and have some doubts.

We get two kinds of tax benefits on home loan. One is on the principle amount we pay, this comes under section 80 C (maximum limit is 1 Lakh) and other one is on the interest we pay on principle amount, this amount is as it is deducted from our salary while counting our taxable salary, right?

So should I opt for EMI of 8333/- Rs. as it becomes 1 Lakh per annum and only this much is eligible under 80 C for tax benefits???

Currently HDFC reduced the floating interest rate (10.5 %). Is it better to opt for floating option from HDFC???

Thanks.

Originally posted by ankur rathi:
Hi, I am planning to take home loan and have some doubts.

We get two kinds of tax benefits on home loan. One is on the principle amount we pay, this comes under section 80 C (maximum limit is 1 Lakh) and other one is on the interest we pay on principle amount, this amount is as it is deducted from our salary while counting our taxable salary, right?

So should I opt for EMI of 8333/- Rs. as it becomes 1 Lakh per annum and only this much is eligible under 80 C for tax benefits???

Currently HDFC reduced the floating interest rate (10.5 %). Is it better to opt for floating option from HDFC???

Thanks.

Rathiji ,

Where are you getting home at an EMI of 8333 ?

BTW , EMI amount does not only contain principle , it also contains interest . Interest amount is more in initial years , and it decreases as years go by

Thus suppose you have an yearly payment of 100000 , a greater percentage of it will be interest and rest principle

hth

Originally posted by Vivek Pandey:

Where are you getting home at an EMI of 8333 ?

Why can't? If home is of 15-18 Lakhs and tenure is of 20-25 years then can't it go to near to that amount...

BTW , EMI amount does not only contain principle , it also contains interest . Interest amount is more in initial years , and it decreases as years go by

Thus suppose you have an yearly payment of 100000 , a greater percentage of it will be interest and rest principle

Understood.

Thanks Vivek.

Rathiji ,

Take a look at the

link on ICICI Bank site

EMI for 15 lpa for 20 years will be 15K

(1) Calculate your amortization schedule to figure out your interest component and principal component per year.
(2) Interest upto 1.5 lacs is exempt from income tax per year.
(3) The principal repayment is exempt upto 1 lac is exempt under 80 C along with other investments that you may have.

- Manish