All you need to know about a Home Loan provisional certificate

A provisional certificate is a repository of all the important details of your home loan, available in a single document.

If you are planning to apply for a home loan, or already have applied for one, you must be aware of the importance of a home loan provisional certificate. This is because you will need this certificate in order to take advantage of the tax benefits of applying for a home loan. Read on to learn more about a home loan provisional certificate.

What is a Home Loan provisional interest certificate?
 

A provisional interest certificate or home loan provisional interest certificate provides you with regular updates of your home loan’s status. It contains a summary of the interest and the principal amounts paid by you towards your home loan for the current financial year among other important details. 

What does the provisional interest certificate contain?
 

A home loan provisional interest certificate consists of the following details of the borrower:

1. The borrower’s details
 

These details include basic information such as the borrower’s name, mobile number, etc.

2. The borrower’s Home Loan account number
 

The borrower must know their home loan account number while communicating with the lender regarding any query related to their home loan. Every home loan account has a unique home loan account number. 

3. The loan amount to be repaid
 

The actual loan amount of a home loan is a combination of its principal amount and the interest accrued. This is the total amount that the borrower must repay after the completion of the loan’s tenure.

4. The EMI (Equated Monthly Instalment) dates
 

The provisional interest certificate also mentions the date when your repayment cycle will begin, and the date when it will end.

5. The interest rate
 

The interest rate of a loan impacts the overall amount that the borrower has to repay to the lender. This interest rate is mentioned on the borrower’s home loan provisional interest certificate.

6. The type of interest rate
 

Borrowers can choose from two types of interest rates i.e., fixed interest or floating interest rate. In a fixed interest rate, the home loan’s interest rate remains fixed throughout the loan’s tenure. On the other hand, when you opt for a floating interest rate, the interest rate can change depending on market conditions.

7. The amount repaid
 

If your repayment cycle has started, you can stay updated on the loan amount that is repaid as the provisional certificate includes this detail.

8. Notifications concerning missed repayments
 

If you have missed contributing towards your loan’s repayment in the past, the occurrence(s) is/are recorded in your provisional interest certificate.

9. Any changes in the principal amount
 

If there are any changes in the principal amount, these changes will be mentioned in the home loan provisional certificate.

10. Any part prepayment-related details
 

Some lenders allow home loan borrowers to pay a substantial portion of the outstanding principal amount of a home loan before its due date. This is called a part-prepayment facility, and its details are mentioned in the home loan provisional certificate.

Frequently Asked Questions (FAQs)

1. Which tax benefits can a borrower benefit from after submitting a Home Loan provisional interest certificate?  

A home loan provisional interest certificate can be used to claim tax deductions. Section 80C of the Income Tax Act allows you to claim income tax deductions up to ₹1.5 lakh on the home loan’s principal amount. In addition, section 24 (b) of the Income Tax Act helps you get a tax deduction of up to ₹2 lakh. 

2. How to get a Home Loan provisional interest certificate?

Most banks make home loan provisional certificates available to their clients through their net banking portals. You can access the provisional certificate of an IDFC FIRST Bank home loan by logging in to the net banking portal and clicking on the “Enquiries” tab.

3. Can a provisional interest certificate be obtained online?

Yes, a provisional interest certificate can be obtained online. Most banks have a net banking or a mobile banking facility which you can use to obtain your provisional interest certificate.

4. Is a Home Loan’s moratorium period mentioned on the provisional interest certificate?

Yes, the moratorium period of a home loan is mentioned on its provisional interest certificate.

For those wondering how this would work for a joint home loan, lenders provide only one provisional certificate for joint account holders. Hence, a single certificate is sufficient while claiming tax benefits using the provisional interest certificate. 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.