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A plot may be a good investment that grows in value over the long-term. Hence, it gives better returns at the resale. Historically Indians are purchasing lands or plots for various purposes predominantly as an investment. A Land loan or plot loan may be a loan provided by banks to borrowers for the acquisition of a plot of land. The repayment is completed in Equated Monthly Instalments (EMI) within a specific tenure prescribed by the bank.
You can use it to get land so you’ll repose on it within the future. While home loans can have tenures of up to 30 years, plot loans extend only up to fifteen years. one among the restrictions on plot loans in India is that they can’t be wont to purchase agricultural land. aside from that, it’s fairly easy to use and acquire approval for a plot loan. Normally, it takes not than every week for your application to be approved. you ought to be a minimum of 18 years old and fewer than 70 years old.
1. Land Loan Interest Rates: The rate of interest just in case of a loan to get land and residential loans are similar. However, some banks offer a few of basis points higher rates for loans for land purchase than that of home loans. Banks provide a stipulated time for construction over the plot, and thus the borrower is required to submit a construction certificate with the bank. If the borrower doesn’t make construction over the plot within the quantity from the date of the primary disbursement, the land loan interest rates structure for the borrower changes from a home loan to a loan against property.
2. Loan to Value Ratio: Loan to value or LTV means the number of loans which a borrower will get against his property. LTV, just in case of loan for land purchase with construction, is significantly lower and can be capped at a maximum of 70% of the land value. within the case of home loans, LTV ranges between 75% to 90%.
3. Lower Tenure: Land loans have relatively a shorter tenure of up to fifteen years, which isn’t the case in home loans, which is amid an extended tenure of 30 years. Therefore, the EMI within the case of a loan for plot purchase is above that of normal home loans. The tenure for a land loan also depends on the age of the borrower, repayment capacity, etc.
4. Tax Benefits: Home loans qualify for a tax deduction on payment of the principal amount under Section 80C of the tax Act also because the interest component under Section 24(b) of the tax Act. On the opposite hand, tax benefits ashore loans aren’t available. However, borrowers could claim a tax deduction on loan if the house is made on a plot purchased by the borrower. A borrower can claim a tax deduction against the loan amount taken for construction, after the completion of construction on the plot.
5. Prepayment Penalty: Floating rate loans sanctioned to individual borrowers are free from the prepayment penalty if a borrower wants to foreclose the loan. However, a land loan kind of a home loan could attract prepayment charges of two to 4% of the prepaid amount if the non-individual borrower has taken it. A borrower should read the loan agreement carefully and clarify the foreclosure charges of the loan before signing the agreement.
1. Plot Loan: A loan for plot purchase can only be availed for the acquisition of a vacant residential plot or a bit of land which can be later wont to construct a house or for investment purpose. The property should be located within the municipal or corporate limits. this type of loan could also be a high-risk loan, and there aren’t any tax benefits. The rate of interest varies for every bank; however, it primarily depends on factors like employment type, the quantity of loan for plot purchase, and thus the variant of the loan. Certain banks offer attractive rates of interesting the borrower is women.
2. Plot + Construction Loan: This loan is availed to urge a residential plot and construct a house on the property within the stipulated time. If a borrower doesn’t commence construction within the specified period, then the bank can increase the speed of interest on the loan.
1. Plot loans are available just for a residential plot, unlike home loans that are available on all properties.
2. the utmost Loan to Value (LTV) when it involves plot loans is stipulated at 70 percent. For home loans, the LTV can go up to 90 percent in some cases.
3. Non-Resident Indians (NRIs) aren’t offered these loans by most banks operating within the country
4. Compared to home loans, the repayment tenure for land loans is lower.
There are two differing types of expenses involved before and after a plot loan is approved.
The first is that the pre-sanction charge, which includes the fees for an inquiry of the property and verification of legal ownership of the property. Then there are the valuer’s fees, which determines the property value and thus the quantity of loan you’re eligible for.
After that, there are post-sanction charges like stamp duty and property insurance alongside applicable registration fees and taxes.
1. Plot Loan
2. Land Loan
3. Plot + construction loan
4. Home Loan
5. Home Construction
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