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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

    Plot Loan Reviews

    • Axis Bank Home Loan
      "Home Loan with AXIS"
      0.5 5.0/5 "Blown Away!"
      From AXIS i have taken a home loan. The approved loan amount was 25 lakhs. The monthly EMI comes around 23000 with a rate of interest of 8.35%. The total tenure was for 15 years. The experience was good with AXIS. The documentation process was also good.
      Was this review helpful? 0
      , surat
      Reviewed on Feb 17, 2018
    • Bank Bazaar Home Loan
      "Best site to get your all ans regarding all financial matter"
      0.5 5.0/5 "Blown Away!"
      I am totally a big fan of this website, When i was worried about home loan interest rate I login to this website and get all the important info in single page and its true ( I confirmed with the respective banks). Thanks for saving my time and money..
      Was this review helpful? 0
      , mumbai
      Reviewed on Feb 17, 2018
    • Gruh Finance Home Loan
      "Interest Rate is High"
      0.5 1.0/5 "Really Bad"
      I took a Home Loan of about Rs.9 Lakhs from this Financiers. The process for getting the Loan was alright. Their interest rate was atleast 3-4% higher than what market standard is. I pre-closed the Loan at the 5 years mark. Wish they reduce their interest rate.
      Was this review helpful? 0
      , jaipur
      Reviewed on Feb 17, 2018
    • HDFC Limited Home Loan
      "Process is good"
      0.5 3.5/5 "Pretty good"
      I have taken my home loan from HDFC LTD. The document process is good and there are no hassles in getting the loan through. The rate of interest and processing charges are normal. The after loan services are also good. It was convenient to get the loan with ease.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 17, 2018
    • HDFC Limited Home Loan
      "Good deal"
      0.5 4.0/5 "Great!"
      I transferred my home loan to HDFC LTD and the process was simple and easy. The process was on time. The customer support and response is good and there are no hassles in the process. The document procedure is also normal. The rate of interest and processing charges are normal. It is better when compared to Axis Bank.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 17, 2018
    • Axis Bank Home Loan
      "Good. Can be more lesser in ROI"
      0.5 4.0/5 "Great!"
      I have taken my home loan from Axis Bank initially and there are no hassles for the approval. It was a pre approved loan and they always have offers for me. The rate of interest and processing charges are high. So I had to transfer the loan to another bank. The services and response is good overall.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 17, 2018
    • HDFC Limited Home Loan
      "Good Experience"
      0.5 3.5/5 "Pretty good"
      I took Home Loan from HDFC Ltd since 2011, at the time interest rate was less, but HDFC Ltd have offered me interest rate around 10%. But I didn't get a better interest as per the RBI norms, then I went to the bank to avail lower interest with some processing fee. I would like to suggest, bank should be very transparent to provide reversed interest rate to the customer.
      Was this review helpful? 0
      , mumbai
      Reviewed on Feb 16, 2018
    • SBI Home Loan
      "Hassle free"
      0.5 4.0/5 "Great!"
      SBI home loan is very good, I just visited three times to the bank. They have disbursed the loan amount on time. My loan amount was around Rs.17 lakhs for 20 years, they gave me floating interest rate is very good. They have repayment loan with nice scheme.
      Was this review helpful? 0
      , pune
      Reviewed on Feb 15, 2018
    • HDFC Limited Home Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      The home loan service is good with the HDFC limited. The customer support service is good with the HDFC limited. They have disbursed the loan amount within 2 weeks of time. The rate of interest and the charges are average with the HDFC limited home loan services.
      Was this review helpful? 0
      , kolkata
      Reviewed on Feb 15, 2018
    • Bank Bazaar Home Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have got fast and quick service from the bank bazaar team and I get follow up calls on time from the bank bazaar customer support team. I know bank bazaar for more than 2 years. I use the bank bazaar website , while applying for the loan which is user friendly.
      Was this review helpful? 0
      , coimbatore
      Reviewed on Feb 15, 2018
    • ICICI Bank Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      The service which I got from the ICICI bank in regards to my home loan application was good . I have got the home loan disbursement more than a month time. The customer support was good with the ICICI bank and they gave me better response in regards to my home loan application.
      Was this review helpful? 0
      , coimbatore
      Reviewed on Feb 15, 2018
    • LIC Housing Home Loan
      "Good Experience"
      0.5 4.0/5 "Great!"
      Recently I took home loan from LIC Housing, they are good in interest rate around 8.70% for the loan amount of Rs. 30 lakhs for the tenure of 20 years. The documentation was simple they took less paper and they approved the loan on time. I am doing auto debit payment from Karnataka bank.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 15, 2018
    • Bank Bazaar Home Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I came to know about bank bazaar through advertisements and I am with the bankbazaar for the past 2 years. The customer support service of bank bazaar gave me immediate response in regards to my home loan application. I used the bank bazaar website while applying for the loan .
      Was this review helpful? 0
      , ludhiana
      Reviewed on Feb 15, 2018
    • ICICI Bank Home Loan
      "Hassle free"
      0.5 5.0/5 "Blown Away!"
      I have taken my home loan from ICICI Bank and the process was good. I had no hassles with the documentation. It was taken from me at my place. The rate of interest and processing charges is normal and there were no hassles while I closed my loan too.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Feb 15, 2018
    • Punjab National Bank Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      The service which was given by PNB HOUSING FINANCE LIMITED nominal . They took around 30days of time to disburse my loan amount. Still they would have given much support from the PNB HOUSING FINANCE LIMITED. The rate of interest and the charges are average as per market rate.
      Was this review helpful? 0
      , ludhiana
      Reviewed on Feb 15, 2018
    • HDFC Limited Home Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have a home loan with Hdfc Ltd,the service is good with Hdfc Ltd. The documents have been collected from my door step. Hdfc Ltd staffs are good during the process. The interest rate 9.25 % which is fine compared to others,it is a excellent experience with Hdfc Ltd home loan department.
      Was this review helpful? 0
      , mumbai
      Reviewed on Feb 15, 2018
    • ICICI Bank Home Loan
      "Good Experience"
      0.5 5.0/5 "Blown Away!"
      I took home loan from ICICI, it was joint account, they gave me special interest of 8.5% of interest based on Women applicant . My loan amount was Rs. 28 lakhs for the tenure of 15 years. The process was good, my KYC was already with them. Hence they disbursed the amount on time.
      Was this review helpful? 0
      , mumbai
      Reviewed on Feb 15, 2018
    • Bank Bazaar Home Loan
      "Good service"
      0.5 3.0/5 "Satisfactory"
      I have the bank bazaar mobile application which is easy to use and user friendly. I know bank bazaar for more than 3months. The customer support and the response is very good with the bank bazaar team. I have got the immediate response from the bank bazaar team after applying for the home loan.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Feb 15, 2018
    • Punjab National Bank Home Loan
      "Average service"
      0.5 3.0/5 "Satisfactory"
      The PNB HOUSING FINANCE LIMITED has disbursed the home loan within the promised time. The customer support service gave me good response in regards to my home loan application . The rate of interest and the charges are average with the PNB HOUSING FINANCE LIMITED.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Feb 15, 2018
    • Punjab National Bank Home Loan
      "Good. Can do better"
      0.5 4.5/5 "Excellent!"
      I had taken my home loan from PNB housing finance limited. It was a bit of a lengthy process for the documentation and the rate of interest was of 8.80% it was not reduced as promised as per RBI, I need to go and request for it. Else it was a good experience.
      Was this review helpful? 0
      , ghaziabad
      Reviewed on Feb 15, 2018
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