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.
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.
|Section 145A||Section 80P||Section 92CD|
|Section 281||Section 32(2)||Section 270A|
|Section 1399||Section 192A||Section 11|
|Section 35AD||Section 80C||Section 32|
|Section 206AA||Section 92E||Section 9|
|Section 153||Section 10(10D)||Section 194DA|
|Section 10AA||Section 80GG||Section 80TTB|
|Section 80JJAA||Section 1940||Section 23B|
|Section 206AB||Section 44AB||Section 87A|
|Section 115JB||Section 154||Section 194D|
|Section 194J(1)(ba)||Sectio 80U||Section 194K|
|Section 56-59||Section 80TTA||Section 234C|
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