A "low interest" loan shouldn't mean you have very little interest in paying it back!
A "low interest" loan shouldn't mean you have very little interest in paying it back!
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    Plot Loans

    In India, purchase of land has been one of the age old forms of investment. Conventionally, investors are inclined towards purchasing property either as an investment for future resale or for building a house. So, in case you’re planning to purchase a piece of land or vacant plot, a plot or land loan might be the right choice for you.

    What is a Plot Loan?

    Plot loans, also known as land loans, are a unique banking product designed to facilitate the purchase of a plot of land. A plot / land loan may often be confused with a home loan, as the latter also concerns the purchase of an existing / construction of new flat or house. However, land loans too addresses a similar need, with the prime difference that they are availed for the purchase of the land on which construction has to be carried out subsequently.

    Perfect Home Loan Deals for you

    While home loans may be obtained with relative ease, a land loan might not be as easy to get. The reason behind this being, land loans concern not only the purchase of land but also the subsequent development of property on the land. When it comes to land loans, lenders operate at a higher risk, as land loans carry significantly higher risk, as compared to home loans. Here, the lender requires assurance about returns on the investment. For this reason, if you wish to up your chances of obtaining a land loan, it would be beneficial if you can provide adequate assurance to the lender about your development plans on the purchased property.

    For lenders, an undeveloped property is a greater risk than a developed property, as it is much easier for the landowner to dismiss an undeveloped property rather than a property which will be utilized as a source of income. For example, if you wish to obtain a land loan for farming purposes, your chances of getting the loan might be higher, as compared to someone, who wishes to purely to purchase the property, but does not have any concrete plans on its development.

    In India, several leading banks like ICICI, Axis Bank, HDFC Bank, Punjab National Bank, IDBI, Federal Bank, etc. offer plot loans to customers for the purchase of land.

    Features & Benefits of Plot / Land Loans:

    Plot/land loans have been around for a while and are accompanied by a distinct set of features. Listed below are some of the notable features and benefits of land loans.

    1. Location & Type of Property:

      While home loans are available for all kinds or types or properties, a land loan may only be availed for the purchase of a residential plot. Another limitation in availing a plot loan is that the land in question must be located within the limits of the respective municipality or corporation. A plot loan is usually taken for the purchase of land with the idea of constructing a house.

    2. Loan to Value Ratio (LTV):

      Loan to value or LTV basically implies to the amount of loan you can get against a property. While the LTV ratio for home loans may be anywhere between “80% to 85%, for plot loans it is significantly lower and could be capped at a maximum of 70% of the land value. So, if you are considering taking a plot loan to purchase land and construct a house thereupon, expect to bear about 30% of the total cost of the land.

    3. Tax Benefits:

      Contrary to popular belief, a land loan will not fetch you any tax benefits. You may however, avail tax benefits on a land loan, only if you plan to construct a house on the plot in the near future. In this case, the tax deduction will only be applicable on the construction amount of the loan and after the completion of the construction.

    4. Tenure:

      Compared to home loans, which usually carry longer tenure, a land loan is accompanied by a relatively shorter tenure. While the tenure for home loans may stretch up to a period of 30 years, the maximum available tenure for a land loan may stretch from 15 - 20 years.

    5. Loan Amount Limit:

      Plot loans offered by banks are often accompanied by a fixed upper limit. You may take the loan only up to a certain limit, as specified under the policy. Like other loans, different banks may carry different upper limits when it comes to land loans, so you must find out which suits you best based on your financial requirements.

    6. Clauses Included:

      If you wish to opt for a land loan, do keep in mind, there are certain pre-requisites which you will have to observe. The most prominent clause of any land loan is that it requires the borrower to begin construction on the acquired plot of land within a specified period of time.

    7. Prepayment Charges:

      Since a plot loan is not the same as a home loan, it is very likely that the loan provider may charge a prepayment penalty. In order to be sure, do enquire with your loan provider about the same beforehand.

    8. Interest Rates:

      Like other types of loans, the interest rates on plot loans can also be floating or fixed, depending on the bank and the prevailing market conditions. However, interest rates on plot loans are relatively higher as compared to other types of loans like home loans or auto loans.

    9. EMIs:

      Home loans are usually characterized by shorter tenures and higher EMIs. This is for the reason that plot loans are sanctioned for a shorter duration as compared to most other types of loans. EMIs on plot loans are also dependent on a number of other factors like the repayment capacity of the borrower, borrower’s age, etc.

    10. Down Payment:

      When it comes to land loans, down payments for them are usually higher. The loan to value ratio for land loans prevails around 70%, which means that the borrower would have to shell out around 30% of the plot value themselves.

    Eligibility:

    Land loans may be obtained by individuals who are residents of India and aged above 21 years. While NRIs also constitute a prominent part of property buyers segment in India, there are not many banks which extend plot loans to this category of individuals. Also, interest rates on plot loans might also be slightly higher for NRIs.

    Documents Required:

    Listed below is the list of basic documents which one may be required to furnish, in order to apply for a plot loan. The documentation requirements are subject to change depending on the eligibility criteria laid down by different lending institutions.

    1. Duly filled Application form
    2. Applicant’s photograph
    3. Proof of Identity
    4. Proof of Residence
    5. Most recent salary slip
    6. Bank statement for the last 6 months
    7. Form 16
    8. Cheque for loan processing fee

    Additionally, you may also be required to provide the following documents pertaining to the land.

    • Original documents pertaining to ownership of the land
    • ‘No Encumbrance’ Certificate for the plot
    • Layouts / drawings of the plot, duly approved by the Town Planning Authority.
    • Revenue receipts
    • Land records
    • Tax receipts for taxes paid by the landowner

    Plot Loan FAQ

    1. Will I get any tax benefits, if I take a plot loan?

      You may avail tax benefits on a construction loan, which forms a part of a plot loan. This implies that the loan combines the cost not only for purchasing the land but also to carry out construction on the purchased plot. A plot loan taken solely for the purpose of purchasing a plot or piece of land will not attract any tax benefit.

    2. I am a salaried individual. I wish to purchase a plot in order to begin construction of a house within the next 6 months. Am I eligible for a plot loan?

      Yes, you would be eligible for a plot loan, as the loan includes a clause which requires the borrower to begin construction of a house within a specified period of time.

    3. Can a plot loan be taken for purchasing agricultural or commercial land which is outside the city’s municipal or corporation limits?

      No, plot loans may only be taken for pieces of land which are located within the municipal limits and the land is meant for residential purposes.

    4. Does a loan for construction include the cost of labor and raw materials?

      Yes, a loan for construction will include both these costs.

    5. I am a self-employed Indian resident. Am I eligible for a plot loan?

      Yes, plot loans are also open to self-employed individuals who hold a healthy credit history.

    News About Home Plot Loan

    • YSR Congress Accuses State Government of Forcible Land Acquisition

      The YSR Congress accused the Andhra Pradesh government of coercing farmers to give up their fertile land under the garb of Land Pooling, also declaring that farmers are being denied their rightful compensation. Although the provisions for acquisition gave the government the go ahead after 90 percent of the villagers agreed, Bhumana Karunakar Reddy, a leader from the YSR Congress, criticized the government for acquiring land that overshot requirements. He further went on to say that farmers were threatened if they were unwilling to part with their lands. Mr Chandrababu Naidu has been accused of violating provisions of the Land Acquisition Act, 2013 and creating a massive land bank of 10 lakh acres through forcible land acquisition. It has been alleged that land has often been forcibly acquired for major projects in the capital region, the Bandar Port and Bhogapuram Airport.

      5th January 2017

    Plot Loan Reviews

    • HDFC Limited Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have got the Home loan service with the HDFC LIMITED around 5 years ago. The customer support was good with the HDFC LIMITED and they have disbursed the loan amount within a week time. The rate of interest is floating which is average when compared with others.
      Was this review helpful? 0
      , mumbai
      Reviewed on Jan 17, 2018
    • DHFL Home Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have a home loan from Dhfl,the service is good. The interest rate they quoted me is fine and the documents have been collected from my door step which was an easy process. Dhfl customer service is good. It is excellent experience with Dhfl home loan department.
      Was this review helpful? 0
      , noida
      Reviewed on Jan 17, 2018
    • HDFC Limited Home Loan
      "Excellent service"
      0.5 4.5/5 "Excellent!"
      Rate of interest offered by Hdfc LTD for the home loan department is 8.3% which is fine compared to other credit service providers in the market. The customer service is good and the documentation part was been smooth. It was an excellent experience with HDFC LTD home loan service.
      Was this review helpful? 0
      , mumbai
      Reviewed on Jan 17, 2018
    • SBI Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have taken home loan from SBI and it was a very good loan experience. The loan amount was for Rs 44 lakhs with the rate of interest of 8.65% which is nominal when compared to all other banks. The process was quite long and it took 2-3 weeks to receive the loan amount. Customer service was good and they responded on time. The tenure of this loan is 30 years and it was overall a good service from SBI.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 16, 2018
    • HDFC Limited Home Loan
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      I am running a home loan with HDFC ltd from the year of 2016. The services are good with HDFC LTD. The interest rate was good and they charged processing around between 2500 to 3000 rupees. They provided a doorstep service for the documentation. I have purchased a residential property too.
      Was this review helpful? 0
      , thiruvananthapuram
      Reviewed on Jan 16, 2018
    • HDFC Limited Home Loan
      "Average service"
      0.5 2.0/5 "Expected more"
      I have taken a home loan with HDFC limited the loan amount is 18 lakhs,rate of interest is very high as compared to others.I submitted documents,i paid my EMI through an ECS payment.I am not happy with rate of interest is not satisfactory hence i closed and got it swapped with different bank.
      Was this review helpful? 0
      , chennai
      Reviewed on Jan 16, 2018
    • Bank Bazaar Home Loan
      "Home Loan"
      0.5 4.5/5 "Excellent!"
      Not sure if this so smooth. Lets hope it get approved. Still can't believe if it will take care of all the intricacies. Blazingly fast and very intuitive user interaction. Give a sense of secure connection even for a non techie user by applying proper logos/icons in proper places. Kudos!!!
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 16, 2018
    • LIC Housing Home Loan
      "Good service"
      0.5 2.0/5 "Expected more"
      Around 2 years ago , I have got the home loan from LIC HOUSING FINANCE. The customer support of LIC HOUSING FINANCE helped me to get the loan on time. They have disbursed the loan amount within the time period but the required loan amount has not disbursed and I am not satisfied with it. The rate of interest is 9.5% which is fixed for 2 years.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jan 15, 2018
    • Bank Bazaar Home Loan
      "Excellent website "
      0.5 5.0/5 "Blown Away!"
      Really Mind blowing your bankbazar. Com website thanks for guide me GOD Bless U And Your Co. Pls praying for us our loan sanction very soon and we pay your loan Amt as soon as possible and I also Spread msg for your best and fast service about loan
      Was this review helpful? 0
      , mumbai
      Reviewed on Jan 13, 2018
    • ICICI Bank Home Loan
      "Normal service"
      0.5 4.0/5 "Great!"
      I had taken a home loan from ICICI BanK during the year 2005. The rate of interest was high. That home loan was completed during the year of 2015. It was very hard to reach the customer support and the process was lengthy too. On the same lines, even the processing is also little bit high compared to other bankers.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jan 13, 2018
    • LIC Housing Home Loan
      "Average service"
      0.5 3.5/5 "Pretty good"
      I have got the home loan from LIC HOUSING FINANCE around 6 years ago. The customer support team is average with LIC HOUSING FINANCE. The rate of interest and the charges are high with LIC HOUSING FINANCE. and it is floating interest rate as well.
      Was this review helpful? 0
      , new delhi
      Reviewed on Jan 12, 2018
    • Punjab National Bank Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have taken a housing loan from PNB housing finance and the loan experience was very good. The loan amount was for Rs 30 lakhs with the rate of interest of 8.5% which is nominal rate when compared to other sources. The process was delayed and it took 15-20 days to receive the loan amount. Customer service was good and they collected documents on time. The tenure of this loan is 20 years and it was overall a good service from PNB.
      Was this review helpful? 0
      , mohali
      Reviewed on Jan 12, 2018
    • DCB Bank Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have taken Home loan from DCB and the loan experience was good, the loan amount was for Rs 8.60 lakhs with the rate of interest of 11% flat which was a little higher when compared to other banks. The process was good and i received my loan amount within 10-15 days. Customer service was good and they collected all the documents from me on time. The tenure of the loan is 15 years and it was a good service that I received from DCB.
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Jan 12, 2018
    • Axis Bank Home Loan
      "Excellent service"
      0.5 4.0/5 "Great!"
      I have applied for the home loan with Axis bank and I got good response from axis bank with regards to my home loan application. The loan would get approved with in 15days of time. The customer support and the response part is good with the AXIS bank.
      Was this review helpful? 0
      , visakhapatnam
      Reviewed on Jan 12, 2018
    • HDFC Limited Home Loan
      "Best service"
      0.5 5.0/5 "Blown Away!"
      I have a housing loan with HDFC LTD and my loan experience was good with HDFC Ltd. The loan amount was for Rs 25 lakhs with the rate of interest of 8.9% which is nominal when compared to all other banks. The process was smooth and i received my loan amount within 1 week. Customer service was good and they provided door step service to collect the documents. The tenure of this loan is 20 years and it was overall a good experience with HDFC ltd
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Jan 12, 2018
    • LIC Housing Home Loan
      "Good"
      0.5 4.0/5 "Great!"
      I have my home loan with LIC which was taken 7 years back. The loan amount was 26 lakhs and the interest rate was 10-115 which was bit high than other banks in the market. I had a smooth and easy process here but the processing fee high here. The loan approved on time so I would like to recommend to others.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 12, 2018
    • Bank Bazaar Home Loan
      "Application Process is good one and helpful"
      0.5 4.5/5 "Excellent!"
      It was a good experience from the bank bazaar side they had taken very simple steps with respect to loan. So the information available on bank bazaar.com is very much helpful.It is very easy to get the home loan through bank bazar. HDFC bank officials are very much responsible and they respond very well to the customer.
      Was this review helpful? 0
      , allahabad
      Reviewed on Jan 11, 2018
    • HDFC Limited Home Loan
      "Better"
      0.5 4.0/5 "Great!"
      I am having the home loan with the HDFC limited and the rate of interest is good one for me with them. Response is very nice one for me with them and they are very good too. I would like to say that the customer service is very organized with the HDFC limited.
      Was this review helpful? 0
      , jaipur
      Reviewed on Jan 11, 2018
    • Kotak Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have taken a home loan from Kotak Mahindra Bank, the loan amount was for Rs 18 lakhs with the rate of interest of 10% which is higher when compared to all other banks. It was overall a good loan experience with this bank. Customer service was good and they provided door step service to collect the documents. I received my loan amount within 10 days. The tenure of the loan is 15 years and i pay an EMI of Rs 20300 for this loan.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jan 11, 2018
    • review Home Loan
      "Home loan with CANFIN HOMES "
      0.5 5.0/5 "Blown Away!"
      I have taken a home loan from CANFIN HOMES LTD. The approved loan amount was 15 lakhs . The given rate of interest was 8.36%. The monthly EMI comes around 20000. the total tenure is for 10 years. there were some processing fees charged by them..
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Jan 10, 2018
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