Loan for land purchase is offered by banks when you need financing to buy a plot or a piece of land. This loan is generally provided for residential purposes and in urban areas. However, some banks do let you use the loan amount to purchase land in a rural area.
Check out the loans for land purchase offered by various banks and financial institutions in India:
Banks/Lenders | Interest Rate (p.a.) | Loan amount | Tenure |
DHFL (Plot Loan) | From 10.25% | Up to 75% of the plot's value | Up to 20 years |
HDFC Bank (Plot Loans) | From 8.70% | Up to 80% of the property's cost | Up to 15 years |
Federal Bank (Purchase of House Plots) | From 8.75% | Up to 60% of the land's value | Up to 5 years |
State Bank of India (Realty Home Loan) | From 9.25% | Up to Rs.15 crore | Up to 10 years |
PNB Housing (Residential Plot Loan) | From 10.10% | More than Rs.75 lakh | Up to 30 years |
Canara Bank (Canara Site Loan) | 9.65% | 75% of the site's cost or four years of your gross annual income/salary | Up to 10 years |
Benefits/key highlights:
Bank Name | Processing Fee | Pre-Closure Charges | |
DHFL |
| 3% plus GST, if the dwelling unit is not built on the plot within the first three years from the disbursement date of the loan |
Penalties/internal charges:
Benefits/key highlights:
Adjustable Rate Home Loan Scheme | |
Loan slab | Interest rates (p.a.) |
For women (up to Rs.30 lakh) | 8.70% to 9.20% |
For women (Rs.30.1 lakh to Rs.75 lakh) | 8.90% to 9.40% |
For women (Above Rs.75.01 lakh) | 8.95% to 9.45% |
For others (up to Rs.30 lakh) | 8.75% to 9.25% |
For others (Rs.30.1 lakh to Rs.75 lakh) | 8.95% to 9.45% |
For others (Above Rs.75.01 lakh) | 9.00% to 9.50% |
TruFixed Loan - 2 Year Fixed Rate Variant | |
Loan slab | Interest rates (p.a.) |
For women (up to Rs.30 lakh) | 9.40% to 9.90% |
For women (Rs.30.1 lakh to Rs.75 lakh) | 9.55% to 10.05% |
For women (Above Rs.75.01 lakh) | 9.60% to 10.10% |
For others (up to Rs.30 lakh) | 9.45% to 9.95% |
For others (Rs.30.1 lakh to Rs.75 lakh) | 9.60% to 10.10% |
For others (Above Rs.75.01 lakh) | 9.65% to 10.15% |
Bank Name | Processing Fee | Pre-Closure Charges | |
HDFC Bank | Up to 0.50% of the loan amount or Rs.3,000, whichever is higher plus taxes | The pre-closure charges vary depending on the variant and the borrower category you fall under |
Penalties/internal charges:
Benefits/key highlights:
Bank Name | Processing Fee | Pre-Closure Charges | |
Federal Bank | 0.50% of the sanctioned loan amount. A minimum of Rs.3,000 and a maximum of Rs.7,5000 | The pre-closure charges vary depending on the variant of the loan and the type of borrower category you fall under |
Penalties/internal charges:
Benefits/key highlights:
Type of applicant | Interest rate (loan amount of up to Rs.75 lakh) (p.a.) | Interest rate (loan amount above Rs.75 lakh) (p.a.) |
Salaried | ||
Women | 9.20% to 9.35% | 9.40% to 9.45% |
Others | 9.25% to 9.40% | 9.45% to 9.50% |
Non-salaried | ||
Women | 9.30% to 9.45% | 9.50% to 9.55% |
Others | 9.45% to 9.50% | 9.55% to 9.60% |
Bank Name | Processing Fee | Pre-Closure Charges | |
State Bank of India | 0.35% of the loan amount plus service tax Minimum of Rs.2,000 plus tax and a maximum of Rs.10,000 plus service tax | Nil |
Benefits/key highlights:
Loan amount | Interest rate (p.a.) |
Less than Rs.75 lakh | Salaried/self-employed professionals - 10.10% to 12.25% |
Businessmen/self-employed individuals - 10.30% to 13.50% | |
More than Rs.75 lakh | Salaried/self-employed professionals - 10.20% - 12.25% |
Businessmen/self-employed individuals - 10.50% - 13.50% |
Benefits/key highlights:
Bank Name | Processing Fee | Pre-Closure Charges | |
Canara Bank | 0.5% of the loan amount Minimum of Rs.1,500 and a maximum of Rs.10,000 | - |
The criteria differ from bank to bank. However, listed below are the general requirements you should be aware of:
The borrower has to present the following document while applying for a loan to purchase land:
If it is a resale case, then previous claim of property documents must be submitted.
If the property is converted, you have to submit the conversion and development charges payment receipt.
Key points to remember regarding the loan for land purchase:
Things to consider before applying for a loan for land purchase
Before you go ahead with your application for this type of loan, there are certain things you need to take into account.
Type of land
If you're planning to apply for a plot loan, you should know that banks generally offer this loan only for residential purposes. You cannot use the financing from a loan for land purchase to buy agricultural or industrial land.
Location of the land
Yes, this also matters as there are certain geographical limitations. For instance, certain banks only offer loans for land purchase if the plot is in an urban area. You may not be able to buy land that is located in a rural area.
Interest rates
The interest rates you get will vary from bank to bank, of course. However, there are other factors that affect the interest rate applied to your your loan. For example, the type of employment, the loan amount, your gender, and the variant of the loan you borrow may affect your rate of interest. Certain banks offer a concession on interest rates if you're a woman.
Loan term
Unlike home loans, a loan for land purchase has a much shorter tenure. You may be offered anywhere between 10 and 20 years as the repayment period.
Other factors you should consider is the purpose of availing this loan. If you're planning to construct a dwelling unit on the land you wish to buy, you may get lower interest rates from your lender.
Depending on the bank, you can apply for a loan for land purchase online or offline. If you want to opt for an online channel, you will have to visit the bank's official website and see if they allow online applications. If they do, you may be required to fill in certain details in the application form.
In case a bank doesn't allow online applications, you can always visit the nearest branch and request for an application form.
However, it's important to discuss the fine print of the loan with someone from the bank. You can also have your doubts clarified before you seal the deal.
This depends on your bank's requirements. For starters, the land you're planning to purchase will be used as security by the bank. In some cases, the bank may request you to pledge additional assets as security as well.
Yes. However, you will need to construct a house on the land you've purchased to avail tax benefits. You will not get tax deductions if you've just bought a land for investment. You should note that the deduction is only available on the loan amount you have borrowed for the construction and only after the construction is complete.
Yes. You will need to insure the land you buy and your repayments as well, in case of an unfortunate event. While some banks offer this as an option, some banks have a mandatory requirement. For further clarification, it's best to contact your lender and ask them for more information.
The repayment options differ from bank to bank. For specifics, you can always get in touch with your bank via their customer care centre or visit their website to check the payment modes. The most common payment modes are the Electronic Clearing House (ECS) and Post Dated Cheques (PDCs).
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