Prepayment of a Home Loan OR Fixed Deposit and avail tax benefit on Principal+Interest?

POSTED BY guptatushar ON January 6, 2014 2:53 pm COMMENTS (3)


I am new to this forum but have referred useful topics in this forum before applying for a Home Loan. I need your advise on my below mentioned thought.

I have taken a Home Loan fron HDFC Ltd. My next disbursement to builder for Rs. 3 Lac is due on Jan end. My question is – What will be more beneficial to me i.e. to do a Fixed Deposit of this 3 Lac amount and to claim tax benefit (Interest+Principal) on the disbursed amount by the bank OR Should I pay this amount from my own resources

Please advise.

3 replies on this article “Prepayment of a Home Loan OR Fixed Deposit and avail tax benefit on Principal+Interest?”

  1. ashalanshu says:

    Dear Gupta, if the house in question is still under construction phase, how can you claim tax benefit on interest part?



  2. guptatushar says:

    Hi Anand,

    To cater the next demand by builder, I can ask the Bank (HDFC Ltd) to disburse the amount to the builder OR I can pay the same to the builder through my savings account. If I choose the first option, I can do a FD of this amount in my savings account and simultaneously can claim tax benefits on the EMI that I will pay to the Bank. I am not sure what will be more beneficial to me.

    I hope now my question is clear now.

  3. Anand says:

    The question is not clear.
    The builder needs 3 lakhs payment from you in January.
    Either the bank pays or you pay. In either case, it is not available for investment.

    Can you reframe the question? Are you going to use this money given by bank for your own purpose other than home?

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