Loans for land purchase or plot loans are secured loans given for purchasing plots of land. Borrowers can use the money to buy plots through direct allotment in real estate projects and resale purchases in housing projects/societies. The plots should be non-agricultural, for residential purposes only and have approval from the requisite authority.
The following sections will cover everything you need to know about plot loans, including their features, benefits and eligibility criteria.
Also Read: Home Loans For Women
The eligibility criteria for loans for land purchases vary from one financial institution to another. The following are some of the standard eligibility criteria for most financial institutions:
You may need the following documents to apply for a land purchase loan. Note that depending on the financial institutions, the requirements may vary slightly.
The following table lists some of the important differences between home loans and plot loans:
Parameters | Home Loans | Plot Loans |
Purpose | For built houses, under-construction properties and for restoration/extension | Given only to purchase a plot of land |
Property location | Anywhere | Municipal or corporation area |
Maximum LTV | 90% of the property value | 75% of the land value |
Interest Rates | Among the lowest rates | Slightly higher than that of home loans |
Tenure | Up to 30 years | Up to 15 years |
Tax benefits | Tax deductions under Section 80C and Section 24B and others | No such benefits are available |
A home loan provides funds for both constructing individual houses and purchasing a flat. Navi offers home loans of up to Rs. 10 crores with interest rates as low as 6.46% p.a. and a flexible tenure of up to 25 years. Download the Navi app to apply for a home loan.
Also Read: How To Compare Home Loans With Home Loan EMI Calculator?
Follow the given steps to apply for a loan from Navi to purchase land:
Owning a plot of land provides more freedom and flexibility to build a home as per your preference. A plot loan or loan for land purchase makes owning land more accessible due to increasing land prices. Before applying for a loan, make sure to compare interest rates, additional charges, tenures and eligibility criteria of different financial institutions.
Ans: A composite loan is meant for purchasing a plot of land and constructing a house. An important feature of this type of plot loan is a time limit for constructing the house, typically ranging from 3 to 5 years, depending on the financial institution.
Ans: The penalties applicable on the non-commencement of construction vary from one financial institution to another. Usually, lenders increase the interest rate by around 2% if they do not start construction within 2-5 years of taking the loan.
Ans: The following are the two ways to repay your loan:
Auto-debit option: For this, you have to issue standing instructions with a financial institution to automatically deduct the EMI amount.
Post-dated cheques (PDCs): You can submit PDCs from a non-lender account to pay EMIs.
Ans: No, you can claim income tax deductions only when you construct a property and not for just buying a plot of land. You can claim tax benefits of up to Rs. 1.5 lakh on principal repayment under Section 80C and up to Rs. 2 lakh on interest repayment under Section 24(b).
Ans: Yes, but most financial institutions offer plot loans to finance the purchase of residential land. There are still some special loans offered for agricultural land. These are available only for specific demographics such as landless labourers and marginal farmers.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
Public Provident Fund (PPF) – Know PPF Details and Its Benefits
In 1968, the National Savings Institute introduced the PPF scheme. The Public Provident Fund (PPF) ... Read More »How to Withdraw PF Amount? – Step-by-Step Guide
EPF (Employees Provident Fund) is a popular savings scheme for employees in India. The Central Gove... Read More »Previous Year in Income Tax: Exceptions on Taxation
‘Previous Year’ in the Income Tax Act, 1961 is an important concept associated with the payment... Read More »What are Capital Receipts and What are its Types?
The concept of a receipt is easy to understand as it is described as a written record that a paymen... Read More »What is Anti-Dumping Duty (ADD) – Its Working, Examples and Calculation
Anti-dumping duty refers to a tax or other charges levied on a particular imported product. The con... Read More »List of 11 Tax-Free Income Sources in India (2023)
There are many sources through which a person can earn his/her income. It can be income from salary... Read More »New GST Rates in India (2023) – Latest Changes in GST Rates
GST or the Goods and Services Tax is one of the most significant tax reforms to be ushered in since... Read More »What is Input Tax Credit (ITC) in GST – Eligibility and Documents Required To Claim ITC
GST is consumption-based taxation levied at all stages in a value chain. Set-off of GST paid in the... Read More »What is Cess on Income Tax: Overview, Types and Calculation
Cess is a tax on taxes imposed by the Central Government or state governments for specific reasons.... Read More »Section 80EEB: Eligibility & Deduction Amount
Electric vehicles are better for the environment and an efficient alternative to fuel-run vehicles.... Read More »What is Section 80GGA: Deductions on Donations Made for Rural Development
Income Tax Act provides several opportunities for taxpayers to claim partial or full deductions. Se... Read More »What is Standard Deduction for Salaried Employees in India (2023)
Standard deduction was introduced in 1974 to establish parity between self-employed and salaried pr... Read More »Top 10 Chit Fund Schemes in India in 2023
Chit funds are one of the most popular return-generating saving schemes in India. It is a financial... Read More »10 Best Gold ETFs to Invest in India in February 2023
Gold ETFs or Gold Exchange Traded Funds are passively managed funds that track the price of physica... Read More »Top 10 Demat Accounts in India [Lowest Brokerage Charges]
A Demat account was created to eliminate the time-consuming and inconvenient procedure of purchasin... Read More »20 Best Index Funds in India to Invest in 2023 (Updated on 31st Jan)
What is an Index Fund? An index fund is a type of mutual fund or exchange-traded fund (ETF) that... Read More »Best Arbitrage Mutual Funds to Invest in India: Returns and Taxation
Arbitrage funds are hybrid mutual fund schemes that aim to make low-risk profits by buying and sell... Read More »Best SIP Mutual Funds To Invest In India (2023) – Its Types And Taxation
A Systematic Investment Plan (SIP) is a convenient way to invest a fixed sum in mutual funds. For i... Read More »10 Best Corporate Bond Funds in India 2023 – With Returns
Corporate bond funds are debt funds that invest at least 80% of the investment corpus in companies ... Read More »10 Best Banks for Savings Account in India (2023)
A savings account keeps your money safe, and lets you earn interest every quarter. There are many b... Read More »All information is subject to specific conditions | © 2023 Navi Technologies Ltd. All rights are reserved.
Start Small. Dream Big.
Start your Investment Journey with just ₹10