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[India] Home Loan - some doubts

ankur rathi
Ranch Hand

Joined: Oct 11, 2004
Posts: 3830
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.
Vikrant Pandit
Ranch Hand

Joined: Mar 27, 2006
Posts: 245
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


Vikrant Pandit
ankur rathi
Ranch Hand

Joined: Oct 11, 2004
Posts: 3830
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.
Vikrant Pandit
Ranch Hand

Joined: Mar 27, 2006
Posts: 245
Rathiji ,

Take a look at the

link on ICICI Bank site

EMI for 15 lpa for 20 years will be 15K
Manish Hatwalne
Ranch Hand

Joined: Sep 22, 2001
Posts: 2579

(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
 
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subject: [India] Home Loan - some doubts