Additional Tax Benefit for first time Home Buyer

If you are planning for buying your 1st house in this financial year you can claim extra benefit on your home loan. First time individual home buyers can get tax deduction on interest of home loan, under newly inserted section 80EE of the Income Tax Act, applicable for assessment year 2014-15. This is in addition to tax rebate on interest payment of home loan, under section 24. Now you can claim total Interest deduction of Rs. 2.50 lakhs on your first self-occupied property.

Eligibility for 80EE rebate:

This rebate on home loan interest is applicable only for home loans satisfying the following conditions:

1. Loan has been sanctioned for house by any financial institutions from 01 April, 2013 to 31 March, 2014.

2. Loan amount sanctioned for acquisitions house property does not exceed 25 Lacs.

3. There are no other house property on the date of sanction housing loan to assessee.

4. Value of house property not exceed of Rs. 40 lacs.

5. Buyer of house property is the first time buyer.

The amount claimed under 80EE cannot be claimed for tax rebate under any other sections in any year.

How to get 80EE tax benefit:

You can either produce certificate from your lender to the HR or get deduction on salary TDS or you can deduct the amount from total income while filing income tax return.

Your home can reduce your tax burden too

Your home can is not your shelter only it can reduce your tax burden too. There is only 3 months of time to end of this Financial year, it is time to start planning your tax saving strategies. Your house can also be used to reduce the tax liability to a some extent. Under Section 24 of the Income Tax Act, interest paid up to Rs 1.5 lakhs per annnum on a home loan & can be set-off from salary or business income, for a self-occupied property. Further if you have got your house rented than there is no limit on Interest paid, you can claim the actual interest paid, no matter what is the Rent amount. The interest amount is eligible for deduction even if you took the loan for reconstruction / renewal/ repair of your house.

Loan for construction eligible for deduction

A loan availed for the construction of a residential property, purchase of a residential property, extension of an existing house, and major repairs and renovation of a house are eligible for tax benefits. Under Section 80C of the Income Tax Act, a home loan borrower can claim a deduction of up to Rs 1 lakh from his taxable income on repayment during the year along with specified savings instruments like provident fund.

All co-owners eligible for deduction

In case there are co-owners to a property, each of them can claim tax benefits separately , in proportion to their share holding in the property. If the share holding is not mentioned in the purchase deed, they can execute an agreement on a stamp paper, mentioning the shares in the property, and claim tax benefits separately . Co-owners can thus claim a deduction of up to Rs 1.5 lakhs per annum separately, on interest paid towards a self-occupied house, and also up to Rs 1 lakh per annum towards principal amount repaid.

Pre-EMI qualifies for benefit

The entire pre-EMI interest amount (the interest paid during the construction period ) is allowed as a deduction under Section 24 of the Income Tax Act equally over five years (20 percent of total interest paid per annum), starting from the year in which the construction is completed.

However, if one avails a loan only for a land purchase, he is not eligible for any tax benefits. In the case of a composite loan (for land and construction ) and the house construction is completed within three years, only after completion of the construction will one be eligible for the tax benefits.

Interest Rate Chart of LICHFL Till 31.03.2013

Interest Rate Chart for Retail Loans
Scheme	Limit	Rate of Interest	Validity
Bhagya Laxmi	For Loan upto Rs. 75 Lacs	10.00%	31.03.2013
	For Loan of Rs. 75 Lacs & above upto Rs. 1.50 Crs	10.50%
Super Choice	For Loan upto Rs. 75 Lacs	10.25%	31.03.2013
	For Loan of Rs. 75 Lacs & above upto Rs. 1.50 Crs	10.75%
Grand 3	For Loan Amount upto & including Rs 40 Lacs	10.70%	31.03.2013
	For Loan Amount more than Rs 40 Lacs and less than Rs. 1 Crore	11.00%
	For Loan Amount more than Rs 1 Crore and upto Rs. 1.50 Crore	11.80%
New Advantage 5	For Loan Amount upto & including Rs 40 Lacs	11.15%	31.03.2013
	For Loan Amount more than Rs 40 Lacs and less than Rs. 1 Crore	11.40%
	For Loan Amount more than Rs 1 Crore and upto Rs. 1.50 Crore	11.65%
Pure Fixed	For Loan Amount upto & including Rs 40 Lacs	10.95%	31.03.2013
	For Loan Amount more than Rs 40 Lacs and less than Rs. 1 Crore	11.20%
	For Loan Amount more than Rs 1 Crore and upto Rs. 1.50 Crore	11.50%

Corporation Bank has decided to slash interest rates on home

Corporation Bank has decided to slash interest rates on home, car and educational loans with effect from September 1 for a three-month period.

The state-run bank has also decided to waive the processing fee for these loans.

The bank's Chairman and Managing Director Ajai Kumar said the interest rates for Corp Home Housing loan for up to Rs 50 lakh would be 10.50%.

The rates would be 10.75% for loans up to Rs 1 crore and 11% for loans exceeding Rs 1 crore. The bank hitherto charged 11.25% interest on home loans, he told reporters here yesterday.

In case of vehicle loans, customers would be charged at 11.25% for a five-year period.

The interest rate for auto loans with a tenure of 7 years would be 11.75% as against 12% charged so far, he said.

Kumar said the bank has launched Corp Doctor Plus scheme for medical professionals, under which any registered medical can avail loans at 12.10% interest rate against the existing rate of 12.60%.

Ashwani Kumar and Amar Lal, both Executive Directors of the bank and K Ramamurthy, General Manger were also present at the event.

SBI Cuts Car, Home Loan Rates 50bps

State Bank of India on Wednesday cut interest rates on loans for homes and cars, a move that could benefit millions of consumers. By cutting rates, the country’s largest lender is trying to capture the growing retail segment in the face of falling demand for loans from corporates. 
The move will force rival private sector and state-run peers to lower interest rates, which could put pressure on their profitability. SBI did not say whether lower rates will be applicable to existing customers. 
“We have targeted the retail segment because the instrument of interest rate should be used for increasing credit flow,” SBI Chairman Pratip Chaudhuri said in an interview to ET NOW. “Large term loan proposals are very few and working capital for good corporates is already happening below base rates...So, for a bank like us, the option is to accelerate the retail (lending).” The rate on car loans now stands at 10.75%, down from 11.25%, which will translate into a monthly repayment of . 1,699 on a seven-year loan, compared with . 1,725 earlier. The rate on home loans up to . 30 lakh will fall to 10.25% from 10.5%. Forloans between . 30 lakh and . 75 lakh, the rate will be 10.4%, down from 10.75%. For home loans over . 75 lakh, the rate will be 10.4%, compared with 11% earlier. The new rates will be effective from August 7.

Interest Rate of LICHFL in August 2012

Interest Rate of LICHFL in August 2012

A New Limited Edition Floating Rate Product called “YUVA” has been introduced w.e.f 01.08.2012 by LICHFL. This product is offered for a Limited Period of 3 Months i.e., for loans sanctioned till 31.10.2012 and for 1st Disbursements to be availed on or before 30.11.2012.:-

Amount of Loan	Interest Rate
Upto and including Rs 40 lacs	10.75%
More than Rs 40 lacs and less than Rs 75 lacs	11.00%
Rs 75 lacs & above upto Rs 1.50 cr	11.25%

This product is Floating Rate of Interest for the first 3 years from the date of first disbursement & would be linked to PLR prevalent on the date of first disbursement. However after 3 years Interest rate will be PLR-250BPS & 75 lacs to 1.50 Cr will be PLR-225BPS

Other products of LICHFL are Grand 3 & Advantage 5

Amount of Loan	Grand 3	New Advantage 5
Upto 40 Lacs	10.70%	11.15%
40 Lacs to 1 crore`	11.25%	11.40%
1 crore to 1.50 crore	11.75%	11.65%

Grand 3 is fixed for 3 years & floating thereafter. New Advantage 5 is fixed for 5 Years & floating thereafter.

Home loan top up is cheaper than personal Loan

These days if you have Home Loan on your house you can get top up on that loan for your personal use. The top up Loan on your home Loan is much cheaper as compared to the Personal loan. It’s come with a interest rate of 13-14% p.a. as compared to the Personal loan whose Rate of Interest is ranging from 15-20% as well as higher Processing Fees.

So if you need personal loan for your personal use like sisters or daughters marriages etc. you can go for home Loan Top up on the existing Loan or loan against property as the same is much cheaper than the personal loan & very easy to process.

If you already have home loan you just need to approach your existing financer for top up on the same. The financer will provide you the loan faster as the property is already mortgaged to them if the financier have margin for the same. Since the end use of the loan is different & not for home purchase or construction, obviously the rate of interest for the top up loan will be higher. However the interest rate on your home loan portion will be same as of earlier & will not be effected by your top up loan interest rate. Financer will just treat those as two separate loan account though the property is same.

Same way if a person does not have any loan on his home can approach financers for his/her business loan/ personal loan needs by offering house as mortgage for cheaper rate of interest.

[For any query on the said matter write your query to Housingfinance.advisor@gmail.com]