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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

    • DHFL Home Loan
      "Average Service"
      0.5 3.0/5 "Satisfactory"
      The loan experience with them had been very good and there has not been no other optional banks and i have chosen to go with them. The process in getting the loan has taken more time than usual. But the loan amount which they had provided had been sufficient and satisfactory.
      Was this review helpful? 0
      , mumbai
      Reviewed on Jun 21, 2018
    • Indiabulls Home Loan
      "Worst Experience"
      0.5 2.0/5 "Expected more"
      Interest rates are high in Indiabulls. Their staffs are very rude and not helpful to me. I have to follow up with them each and every time by visiting the branch. Their is no net banking option. They used to deduct the money by using the ECS. They charged me around Rs. 1100 as processing fee. They offered me the interest rate of 8.6% which is little bit high compared to other banks
      Was this review helpful? 0
      , gurgaon
      Reviewed on Jun 20, 2018
    • Indiabulls Home Loan
      "Home loan experience"
      0.5 1.5/5 "Bad"
      Worst experience and bad management. Worst loan provider. No value on their commitment. They have tied up with good builder by giving them 99 + 1 % loan offer. Those are just a bluff. Initially they will tell that we will give 99% loan but later they will that no you are not eligible.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 20, 2018
    • review Home Loan
      "Great"
      0.5 4.0/5 "Great!"
      I am having the Home loan with the Saraswat bank limited and the rate of interest is around 8.11%, also the customer service is very prompt. I am very happy with the Saraswat cooperative bank, also am very happy with them till now.
      Was this review helpful? 0
      , pune
      Reviewed on Jun 20, 2018
    • Bank Bazaar Home Loan
      "Easy to get"
      0.5 4.5/5 "Excellent!"
      I have received a mail from bankbazaar on gmail. When i click on the link it will go through bankbazaar website. I applied the credit card page and i have received a call from the customer care executive. It is easy to get a credit card from bankbazaar people. Overall, I'm very much satisfied about the bankbazaar services.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 19, 2018
    • Indian Bank Home Loan
      "Best Service"
      0.5 5.0/5 "Blown Away!"
      My housing loan experience was good with Indian bank, the loan amount was based on my requirement and the rate of interest was nominal when compared to other banks. Documents were collected on time and the customer service was good. The tenure for this loan is 20 years.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 19, 2018
    • RELIANCE HOME FINANCE LIMITED Home Loan
      "Average Service"
      0.5 2.0/5 "Expected more"
      It has been a very good loan experience and they had been given me with a good loan amount and i was satisfied. The interest rate with them had been little high but the process in getting the loan has been easy and there has not been any issues faced so far.
      Was this review helpful? 0
      , surat
      Reviewed on Jun 19, 2018
    • Punjab National Bank Home Loan
      "Very Prompt Service"
      0.5 4.5/5 "Excellent!"
      I have a got loan on time. Everything was done in a smooth process. I'm yet to pay the first month EMI. The people who are working in PNB housing are very prompt and responsive. They have offered me very good interest rate. For the first year, they have offered me interest rate of Rs. 8.4% and from the 2nd year the interest rates will be based on floating price. I have got a separate relationship manager.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 19, 2018
    • Bank Bazaar Home Loan
      "Good Experience"
      0.5 5.0/5 "Blown Away!"
      Its is easy to get loan. They have multiple option to choose the best bank. This is the 1st transaction i have ever made. I'm using this website rarely. Whenever i am in need i will use bankbazaar. Through Internet search i came to know about bankbazaar.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jun 19, 2018
    • Punjab National Bank Home Loan
      "Easy Process and Good Experience"
      0.5 4.0/5 "Great!"
      Documentation process was quite easy. I have got the loan on time. The banking people are very helpful. As per the market standards they have offered me interest rate. Next month i have to pay the EMI. The processing fee is nominal when i compared to other banks. The overall experience is good and I'm very much satisfied about.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jun 19, 2018
    • ASPIRE HOME FINANCE CORPORATION LIMITED Home Loan
      "Average service"
      0.5 3.0/5 "Satisfactory"
      I got my housing loan form Aspire home finance corporation ltd . Am not satisfied with rate of interest which is too high The customer service and response is good. It took 10 to 15 days for the documentation and approval process. They gave the tenure period of 20 years which i make the payment through ecs .
      Was this review helpful? 0
      , mumbai
      Reviewed on Jun 19, 2018
    • ICICI Bank Home Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      It has been a very good experience with them and the process has taken nearly ten days in getting the loan amount. The loan amount which they had provide had been satisfactory and interest rate also had been okay, where it has been 9.30% initially but now it has been changed to 8.50%. There has not been any issues faced so far.
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Jun 19, 2018
    • ICICI Bank Home Loan
      "Best Service"
      0.5 5.0/5 "Blown Away!"
      I have taken housing loan from Icici bank , as they have given promising rate of interest while comparing to other banking which available in market There is no processing fees and easy approval process , payments made through ecs process .customer service and customer response is good regarding queries. The tenure period is 20 years .
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jun 19, 2018
    • ICICI Bank Home Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      I have taken housing loan from Icici bank , as they have given promising rate of interest while comparing to other banking which available in market There is no processing fees and easy approval process , payments made through ecs process .customer service and customer response is good regarding queries. The tenure period is 20 years .
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Jun 19, 2018
    • ICICI Bank Home Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      I have taken housing loan from Icici bank , as they have given promising rate of intrest while comaparing to other banking which available in market , easy approval process , payements made through ecs process .customer service and customer responce is best reagarding queries provides solution. The tenure period is 10 years .
      Was this review helpful? 0
      , new delhi
      Reviewed on Jun 19, 2018
    • LIC Housing Home Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      I took a housing loan from the LIC housing Finance. The Builder processed the loan for me. The interest rate was 10% initially reduced the rate to 8.% recently. The tenure of the loan is 17 years. There are no additional charges such as part payment charges. Overall it has been a really good experience.
      Was this review helpful? 0
      , chennai
      Reviewed on Jun 18, 2018
    • review Home Loan
      "The Service needs Improvements"
      0.5 2.0/5 "Expected more"
      I took a home loan from the CANFIN, The service was also good, I confirmed and reduced the rate after they tried to manipulate my father with incorrect information. The loan amount was 15 lakhs, I got the loan amount with in 1 month, The interest rate was nominal when I took it. Now it seems high because the rates come down. Also they charged me almost 4000 rupees for reducing the interest rate to the current one.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 18, 2018
    • Sundaram BNP Paribas Home Finance Limited Home Loan
      "They have to act on what they have committed to the customer"
      0.5 4.0/5 "Great!"
      Initially, the have copy cat all my documents which i have already provided in banks. They said they will processing the loan immediately like within 15 days. But after that they started my process fresh and asking the documents from me. But the have sanctioned the loan after 2 months. They are not promised their words. They are very diplomatic in handling the things. It is not like their terms and conditions like banks. The interest rate was competitive and better. Initially they said no bank can give fixed interest rates.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jun 18, 2018
    • Bank Bazaar Home Loan
      "Satisfied with Bankbazaar"
      0.5 4.0/5 "Great!"
      Bankbazaar is providing very good services. I have received a mail from bankbazaar. They have given more option and the executive choose the best option. I have started using this website for 2 months. They have all the documents from my office. The executive very helpful and very Co-operative
      Was this review helpful? 0
      , mumbai
      Reviewed on Jun 18, 2018
    • Punjab National Bank Home Loan
      "I'm Satisfied with PNB Housing"
      0.5 4.0/5 "Great!"
      They have given me that the rate of interest rate is 8.5% is applicable for 1 year. After 1 year, the interest rate is depends on the market rate. Process fee is nominal. Processing fee is okay and its like other banks. I have got the loan on time. They executive helped me a lot to sanction the loan quickly. The documentation process was good. I'm paying the EMI of Rs. 35000. I used to make the payment through ECS.
      Was this review helpful? 0
      , mumbai
      Reviewed on Jun 18, 2018
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