Tax exemption on the interest paid on the loan of the second house ?

Dear JagoInvestor team and members,

I have a query with regards to the tax exemption on the interest part paid on the loan of the second house. My first loan was paid off in September 2013. I have purchased a second house, possession for which is expected in Oct 2014. I am currently paying pre-EMI on the second loan.

Question:
The interest paid (after the possession) on the 2nd loan qualifies for complete exemption and the limit of Rs. 1,50,000/- on the interest part does not apply on the second loan. In my case, since the first loan is paid off, does this rule apply?

Or

The loan on the second loan will be considered same as the first loan in this situation – where I can claim the principal paid under section 80C and interest exempted upto 1.5 lacs?

Thanks to answer.
Best regards,
Mukesh