I have two loans currently ongoing ,
- Education Loan (10.25% floating, I am co-applicant with wife with wife pursing full time higher education). Current disbursal ~ 9 Lakhs.
- Home Loan (10.25% floating, applied under my name). Current disbursal is 0 Rs, but need to pay around 6.5 Lakhs in next 2 months to developer. The home will be handed over in Aug 2015.
Take home salary currently is around 1.2 Lakhs per month, with around 2.5 Lakhs cash available in bank accounts.
I have two options,
- Stockpile salary of the next two months, and let the education loan as is without prepayments of education loan. In this case, I will directly pay for the home loan when it is required after 2 months completely, without disbursing anything from bank for the home loan.
- Payoff the education loan partially immediately, i.e. even 2.5 Lakhs and keep paying off the education loan as salary is credited.
The reason I enquire about this is that under taxation law,(though I dont have full knowledge) but there is Section 80E for education loan deducation, and another section for home loan interest deduction. Can you please advise which is the most suitable option for me.