Multiple banks. Different interest rates. Call it a "conflict of interest".
  • Personal Loan BYTES FROM OUR KITCHEN

    Loan for Land Purchase

    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

    1. DHFL (Plot Loan)

    Benefits/key highlights:

    • The DHFL Plot Loan is available to both salaried and self-employed (professionals or businessmen) individuals.
    • Both Indian residents and non-Indian residents are eligible for this loan.
    • The loan amount sanctioned depends on your annual income as well as your ability to clear the loan on time.
    • You can add a co-applicant to increase the loan amount.
    • The loan term cannot go beyond your retirement age, which is 70 years for self-employed applicants and 60 years for salaried applicants.
    • There are two modes of payment available for the EMI repayments of this loan—Post Dated Cheques (PDCs) or Electronic Clearing Service (ECS)/National Automated Clearing House (NACH). The latter will be based on standing instructions, which you will have to share with your bank.
    • The land you purchase with the sanctioned loan amount will be used as security for this loan.
    • You may have to submit additional assets like fixed deposits, savings certificates, life insurance policies, and more as security. However, this depends on the bank’s requirements.
    Bank Name Processing Fee Pre-Closure Charges
    DHFL
    • Up to Rs.30 lakh – Rs.5,000 plus GST and documentation charges
    • From Rs.30 lakh to Rs.75 lakh – Rs.10,000 plus GST and documentation charges
    • Above Rs.75 lakh – Rs.20,000 plus GST and documentation charges
    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:

    • Any ECS or cheque bounces will attract a fee of Rs.500 plus GST.
    • You will be charged 18% p.a. on your outstanding dues if you default on your payments.
    • When you retrieve your documents during loan closure, you will be charged a certain amount of fees:
    • For loans of up to Rs.10 lakh – Rs.1,000 plus GST
    • For loans above Rs.10 lakh – Rs.2,000 plus GST
    • Fetching the foreclosure statement attracts a charge of Rs.500 plus GST.
    • You will be charged Rs.500 plus GST to get a copy of your property documents.

    2. HDFC Bank (Plot Loans)

    Benefits/key highlights:

    • You can borrow the HDFC Bank Plot Loan to purchase a resale plot, a plot through direct allotment, or to transfer your loan from another bank or financial institution.
    • You get expert technical and legal counselling when you opt for this loan.
    • This loan is available for both salaried and self-employed individuals.
    • Only resident Indians can apply for this loan.
    • There are two variants under the Plot Loan—Adjustable Rate Home Loan Scheme and TruFixed Loan – 2 Year Fixed Rate Variant.
    • The interest rates for both these variants differ based on the different slabs. More details in the table below.
    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:

    • Any delayed payments of interest or EMI will attract an additional penalty interest rate of 24% p.a.
    • You will be charged Rs.200 for check dishonours.
    • Increasing or decreasing your loan term incurs a charge of up to Rs.500, plus taxes.
    • You will also be charged a conversion fee, if you decide to switch between schemes. This varies based on the type of scheme you’re moving to.

    3. Federal Bank (Purchase of House Plots)

    Benefits/key highlights:

    • The Federal bank Purchase of House Plots Loan is available for those who wish to construct a house on the plot they have bought.
    • This loan is available to salaried employees, self-employed individuals, and business persons.
    • You have to submit minimal documentation during the application process.
    • You can also expect a quick approval process with this loan.
    • The repayment for this loan can be done in the form of EMIs.
    • The security of this loan will be the plot purchased with the sanctioned amount.
    • Federal Bank offers several payment modes to repay the EMI of this loan:
    • Mobile banking
    • Cheques
    • Automated payments through Electronic Clearing System (ECS)
    • Standing instructions
    • Internet banking via FedNet
    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:

    • For delayed payments, you will have to pay an additional penalty interest rate of 2% per month on the overdue amount.
    • Switching a loan from floating rate to fixed rate and vice versa attracts a conversion charge of 0.25% on the outstanding balance or drawing power, whichever is higher.
    • The documentation charges are capped at Rs.10,000, and this includes the processing fee. Further breakdown below:
    • Up to Rs.2 lakh – No charge
    • Between Rs.2 lakh and Rs.10 lakh – Rs.500
    • Between Rs.10 lakh and Rs.30 lakh – Rs.1,000
    • Between Rs.30 lakh and Rs.50 lakh – Rs.2,500
    • Between Rs.50 lakh and Rs.1 crore – Rs.5,000
    • Above Rs.1 crore – Rs.10,000

    4. State Bank of India (Realty Home Loan)

    Benefits/key highlights:

    • The State Bank of India Realty Home Loan is available only for resident Indians.
    • If you’re a woman applicant, you’re eligible for an interest concession.
    • The interest rates offered on this loan vary depending on the loan amount you wish to borrow and the type of borrower category you fall under. More details below:
    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

    5. PNB Housing (Residential Plot Loan)

    Benefits/key highlights:

    • The PNB Housing Residential Plot Loan offers financing for the purchase of a residential plot in an urban area.
    • You cannot be more than 70 years of age at the time of loan maturity.
    • You’re required to contribute a minimum of 10% of the total property’s cost. This is inclusive of registration charges and stamp duty.
    • The funding you receive from PNB Housing depends on the loan amount and the market value of the plot you’re willing to purchase. More details below:
    • Up to Rs.20 lakh – 90% of the market value
    • From Rs.20 lakh to Rs.75 lakh – 80% of the market value
    • Above Rs.75 lakh – 75% of the market value
    • The land you purchase with the sanctioned loan amount will be used as security. PNB Housing may require you to submit additional assets as security.
    • The loan will be disbursed once you have paid your contribution either in lump sum or as per the demands set by PNB Housing.
    • You can repay the loan in the form of EMIs using either of the two available payment modes—Post Dated Cheques (PDCs) or Electronic Clearing System (ECS).
    • The rate of interest you get on the loan depends on the loan amount you borrow:
    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%

    6. Canara Bank (Canara Site Loan)

    Benefits/key highlights:

    • The Canara Bank Site Loan is available for those who wish to purchase housing sites from Central and State Government authorities, town planning development authorities, or from any other body constituted by the Government.
    • This loan is available for both resident Indians and non-Indian residents.
    • You have to be less than 60 years of age.
    • The margin offered is 25% on the project.
    • The security for the loan is the site you will be purchasing with the sanctioned amount you receive from Canara Bank.
    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 -

    Eligibility

    The criteria differ from bank to bank. However, listed below are the general requirements you should be aware of:

    • You have to be salaried or self-employed with a steady income flow.
    • You have to be either an Indian resident or an NRI.
    • Some banks will take your repayment capacity into consideration.
    • Banks will also require information about the number of dependents in your family.

    Documents required

    The borrower has to present the following document while applying for a loan to purchase land:

    • Title deeds
    • Sale deed from architect
    • Engineer for the property to be purchased
    • Approved drawings of proposed purchase
    • Copies of allotment letter
    • Agreement of sale

    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:

    • Residential and commercial conversion can be funded. Agricultural land in green or orange belt can’t be funded.
    • The plot must be independent or in a gated community.
    • The geographic location of the property matters to the lenders. So check with the lender before you apply for the loan.
    • The loan to value ratio lower.
    • The loan tenure is restricted to 15 – 20 years.
    • The rate of interest might be slightly higher when compared to a home loan.
    • While taking the loan make sure that there is no condition to start the house construction within a certain period.
    • The property bought with the loan for land purchase is for investment and not with the intention to sell.
    • This is a riskier investment as it may attract a lot of litigation at the end of the day.
    • The land can be however mortgaged in the later stage to meet your financial requirement.

    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.

    How to apply for a loan for land purchase ?

    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.

    Loan for land purchase FAQs

    1. What factors are taken into consideration to decide the loan amount?

    Besides the value of the plot, your bank may consider several other factors like:

    • Your age
    • Your employment
    • Your assets and liabilities
    • Your occupation
    • Number of dependants
    • Your spouse’s income
    • Your savings history

    2. Do I need to provide security to acquire this loan?

    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.

    3. Will I get tax benefits on a loan for land purchase?

    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.

    4. Do I need to insure the land I purchase?

    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.

    5. How do I repay my loan?

    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).

        

    Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.

  • reTH65gcmBgCJ7k
    This Page is BLOCKED as it is using Iframes.