What Is A Home Loan Provisional Certificate And Why Do You Need One?

A home loan provisional certificate is a statement issued by your lender that provides details of your home loan account. It summarises the repayment made during a specified financial year, breaking down the principal and interest components.

This certificate contains a summary of your loan amount as well as the interest payments and principal amounts due for the current financial year.

Lenders often issue a provisional interest certificate at the beginning of the financial year, showing the estimated interest and principal amounts payable for that year.

A home loan from a financial institution offers you specific tax benefits. Borrowers get tax benefits under the Old Tax Regime through Section 80C of the Income Tax Act, 1961, for principal payments and Section 24 for interest payments on their home loan EMIs with limits of Rs 1.5 lakh and Rs 2 lakh, respectively.

A provisional certificate enables borrowers to view their current home loan principal and interest payment information. The home loan provisional and interest certificates serve to help you during tax filing, and they also enable you to receive tax benefits.

What Is Home Loan Provisional Certificate?

The bank gives you a repayment estimate statement at the beginning of the financial year when you apply for a home loan. This statement outlines the exact amount of interest and principal payments you need to make to the bank according to current interest rates and charges.

The statement functions as a home loan provisional certificate. The calculation shows your repayment amount based on the terms of your loan agreement and current market interest rates.

Why Do You Need This Certificate?

Employers need to get information about the total tax savings that employees make during their financial year. An employee who has taken a home loan must disclose the estimated interest rate and principal repayment information at the beginning of the financial year to receive tax benefits under Sec 80C, Sec 24, Sec 80EEA and other applicable sections.

The bank issues a home loan provisional certificate to borrowers which contains all the necessary information about their estimated annual interest and principal payments, their current loan balance and projected year-end loan balance. The employee needs to receive the home loan provisional certificate from the borrower to establish the correct TDS amount.

It consists of details such as actual interest levied on the loan, interest and principal paid by the borrower during the financial year, remaining loan amount, current EMI, etc. The certificate helps you determine your tax deduction amounts from home loan principal and interest payments when you file your tax returns.

How to Get Home Loan Interest Certificate?

The lender will provide you with a home loan interest certificate when you request it through online banking, by sending an email, calling customer care or visiting your nearest bank branch in person. Joint home loan borrowers can also get a home loan provisional certificate from the lender, which displays separate information according to each owner's property percentage and loan amount.