Check what are the difference between Home Loan & Plot Loan

Features of a plot loan

Keep in mind the points given below before you apply for a plot loan:

1. The plot of land should be located within the limits of the municipality or corporation
2. The loan cannot be used to buy agricultural land
3. The land should not be located in an industrial area or a village area
4. The tenure of the loan can go up to 15 years
5. Tax deduction is only eligible for loan taken for construction of the property on the plot and can only be claimed after the construction has been completed
6. The loan-to-value (LTV) ratio that you will get is up to 80% (which means up to 70% of the property cost will be provided as a loan)
7. Depending on the lender, you can avail a plot loan to purchase a plot through direct allotment or to buy a resale plot

Features of a home loan

1. You can get a home loan to buy property at any location of your choice
2. The tenure of the loan can go up to 30 years
3. Tax deduction can be availed
4. The loan-to-value (LTV) ratio is up to 90% of the cost of the property, depending on the lender
5. In the case of joint home loans, if both the husband and wife have separate sources of income, both can claim income tax deduction on the loan separately, for both the principal and interest component of the loan
6. Depending on the lender, you can avail a home loan to buy either an apartment, bungalow, or row house from approved builders
7. You can also avail a loan to buy properties from government developmental authorities, from existing cooperative housing societies/apartment owners' associations, or homes built by private homeowners

Similarities in home loan and plot loan

Both home loan and plot loan have similar eligibility criteria, interest rates, and application process, although this can also be dependent on the bank or NBFC that you are applying from. Your Credit Score also plays an important part in your home loan application process, whether it is for a home loan or a plot loan.

Understanding the purpose and features of both a home loan and a plot loan can help you decide which one would be best suited to your requirements, whether it is a ready-to-move in residential unit or one that will be constructed later as per your needs.

A good credit score can help you secure lower interest rates on loans and credit cards.

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