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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 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.

    Plot loan eligibilty criteria

    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 for plot loan

    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.

    Plot Loan Reviews

    • Oriental Bank of Commerce Home Loan
      "Average service"
      0.5 3.0/5 "Satisfactory"
      I have been using my health insurance with oriental bank , there service is average, i have applied this health insurance recently, and i use to pay premium in yearly basis, and it use to get auto debit from my account, and there customer service is not up to the mark.
      Was this review helpful? 2
      , bangalore
      Reviewed on Nov 16, 2018
    • IDBI Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      My mom have applied for home loan from IDBI bank, there service is good, they rate of interest and processing fee which they have charge was nominal and the loan amount which they have given me was sufficient and tenure period which they given me was sufficient and it have been 2 years i have been applied for home loan from this bank, till now service i have experience was good.
      Was this review helpful? 1
      , mumbai
      Reviewed on Nov 16, 2018
    • HDFC Limited Home Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have been holding my home loan with HDFC LTD for long time, the loan amount which they have given me was sufficient and the rate of interest they charge me s not fixed it use to fluctuate time to time and i have taken loan for 30 years tenure period and now just 5 years more to go and they have charged processing fee it was nominal.
      Was this review helpful? 1
      , mumbai
      Reviewed on Nov 16, 2018
    • SBI Home Loan
      "Need to improve the customer care"
      0.5 4.0/5 "Great!"
      They are not good in their customer support. The rate of interest is more when i compared with other banks. I have taken the home loan in 2012. Its not easy to get a loan from SBI. I have purchased the loan amount of Rs. 5 lakhs and they have given the interest rate of 10.25% when i purchase the loan now they have changed upto 9.25%. If i want to get any information about the loan, in the customer care, its taking more time consumption or else i have to visit the home branch and the repsonse was not upto the mark.
      Was this review helpful? 1
      , bangalore
      Reviewed on Nov 16, 2018
    • Indian Bank Home Loan
      "Average service"
      0.5 3.0/5 "Satisfactory"
      It was an average experience with Indian bank for home loan, the loan amount was for Rs 18 lacs with nominal interest rate when compared to others. Customer support was not up to the mark and their response was delayed. The tenure period for this loan is 20 years.
      Was this review helpful? 0
      , ghaziabad
      Reviewed on Nov 16, 2018
    • Axis Bank Home Loan
      "Average service"
      0.5 4.0/5 "Great!"
      It was an average experience with AXIS bank for home loan, the loan amount was based on my requirement and the rate of interest was nominal when compared to others. Customer support was not up to the mark with AXIS bank and the tenure period for this loan is 10 years.
      Was this review helpful? 1
      , bangalore
      Reviewed on Nov 16, 2018
    • Axis Bank Home Loan
      "EXCELLENT"
      0.5 5.0/5 "Blown Away!"
      I am using the housing loan from the AXIS BANK from past three to four months i have applied it where the process is quick to get the loan it took 20 days to get the loan. The documentation process is simple the loan amount is very good also the rate of interest is 8.5% which is floating.
      Was this review helpful? 0
      , kolkata
      Reviewed on Nov 16, 2018
    • HDFC Limited Home Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      It has been a good experience i had with this loan where the loan amount which they had provided has been satisfactory as well. The interest rate with them has been nominal when compared with the market rate and there has not been any hidden charges made by them.
      Was this review helpful? 1
      , noida
      Reviewed on Nov 15, 2018
    • ICICI Bank Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      My home loan experience was good with ICICI bank, the process was smooth and i received my loan amount on time. The rate of interest is very less when compared to other banks. Customer service was good with ICICI bank and the tenure period for this loan is 20 years.
      Was this review helpful? 0
      , kolkata
      Reviewed on Nov 15, 2018
    • HDFC Limited Home Loan
      "Best Service"
      0.5 5.0/5 "Blown Away!"
      My experience was good with HDFC LTD for home loan, the loan amount was for Rs 25-30 lacs with less interest rate when compared to others. The processing time for disbursal was less. Customer service was good with HDFC and the tenure period for this loan was for 10 years.
      Was this review helpful? 1
      , ahmedabad
      Reviewed on Nov 15, 2018
    • DHFL Home Loan
      "Average service"
      0.5 3.0/5 "Satisfactory"
      I have been using my home loan with DHFL , there service is not up to the mark, they have charged processing fee nominal and the rate of interest was also nominal they have charged to me,the loan amount they have given me up to 13,00,000 for 20 years tenure period, but they took to much delay in getting this loan amount.
      Was this review helpful? 1
      , ghaziabad
      Reviewed on Nov 15, 2018
    • HDFC Limited Home Loan
      "Very Good Service"
      0.5 4.0/5 "Great!"
      It has been a good experience i had with this loan and the loan amount whcih they had provided has been sufficient and satisfactory. The interest rate with them has been nominal and there has not been any hidden charges made by them. Their customer support has also been helpful at times.
      Was this review helpful? 1
      , chennai
      Reviewed on Nov 14, 2018
    • Bank Bazaar Home Loan
      "Very nice services"
      0.5 5.0/5 "Blown Away!"
      It is a good platform but require more support and more offers. Really appreciate your efforts to bring transparency . I wish best of luck to entire BB Team to serve more customers and bring more happiness in society. You are the best in market.
      Was this review helpful? 2
      , delhi
      Reviewed on Nov 14, 2018
    • SBI Home Loan
      "Not satisfied with the service"
      0.5 1.0/5 "Really Bad"
      The experience with this home loan has not been good where the process has taken more time than usual. But they had been having the best interest rate, the charges which they had been making has been very high. Especially the check bounce charges has been high.
      Was this review helpful? 2
      , hyderabad
      Reviewed on Nov 13, 2018
    • DHFL Home Loan
      "Need to be very faster"
      0.5 2.0/5 "Expected more"
      I have a home loan with DHFL Bank and it was taken in the year of 2012. The process they had at that time was very slow. The customer service is moderate. Whenever I visit the bank for return file recording they don't provide and ask them to come back because of the system issues. The rate of interest is average.
      Was this review helpful? 3
      , mumbai
      Reviewed on Nov 13, 2018
    • HDFC Limited Home Loan
      "Its Good"
      0.5 4.5/5 "Excellent!"
      For my first house I took loan from HDFC Limited, the process was good. Before 15 years back I have Rs. 4 lakhs, for the tenure of 20 years I closed the loan within 5 years without any charges. HDFC limited service is good but now understand they are engaging for few service with the broker, I suggest them they should discontinue the engaging the broker
      Was this review helpful? 2
      , hyderabad
      Reviewed on Nov 13, 2018
    • LIC Housing Home Loan
      "Need Improvement"
      0.5 4.0/5 "Great!"
      LIC housing loan interest rate is high, they told something but finally they disbursed the amount with higher interest. Best thing about LIC they don't have preclosure charges. The process was very difficult to avail or close the loan. For every queries I need to visit to the home branch at Trichy.
      Was this review helpful? 1
      , hyderabad
      Reviewed on Nov 13, 2018
    • Bank Bazaar Home Loan
      "Best experience "
      0.5 4.0/5 "Great!"
      Fast agriment filling , best intrest rates , good comparison between more options . i hope other rest services also too very nice , fast and easy to apply . i m realy approach others to take loan from bankbazaar.com , due to easy , fast , best and enjoyfull
      Was this review helpful? 0
      , delhi
      Reviewed on Nov 13, 2018
    • Bank Bazaar Home Loan
      "Good. easy to get the Bank details for loan"
      0.5 4.0/5 "Great!"
      Easy to get the Bank details with minimum requirements. looking forward for Bank call. hope Bank bazaar will help me to get the easy process home loan. Thank you so much to Bank bazaar to search the home loan and Bank details. trust we will get the only helpful details in my registered mail id.
      Was this review helpful? 1
      , indore
      Reviewed on Nov 13, 2018
    • LIC Housing Home Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      The experience i had with this loan has been simple and easy, the loan amount which they had provided has been sufficient and the interest rate with them has been nominal. There has been some charges which they had made which has been nominal. Their customer support has been responsive as well.
      Was this review helpful? 1
      , secunderabad
      Reviewed on Nov 13, 2018
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