Can You Get a Loan to Buy Land

Home and plot loans are different. A plot loan is a loan meant for buying land or a plot you can not take a plot loan for building or constructing a home. Whereas a home loan helps you purchase a ready-built house, an under-construction property, or for constructing a house or an apartment on a plot you already own. Most of the people planning to purchase a plot and construct a home of their own choice but purchasing a plot can be costly and you need a loan to purchase it right? So there are various options available for home loan but are there any loans for plots? Let’s discuss it here!

What is a Plot Loan?

As the name suggests, a plot loan is a loan meant for buying land or a plot. You can use it to build a house or for investment, but you can only use this loan for buying land, which means banks will sanction loans on the basis of land value and not for building or constructing anything else in the land. Also, you need to know that Plot loans are only sanctioned for residential plots.

Did you know? Plot loans are also available to buy industrial plots for any commercial purpose. They are called commercial plot loans.

What are the Key Features of Plot Loans?

• Purpose: To purchase a residential plot.

• Tenure: Generally, up to 15-20 years.

• Interest Rates: Vary based on the lender and your credit profile,

• Loan Amount: Up to 70% of the plot's market value.

Can you get a loan for purchasing a plot?

Yes, you can get a plot loan but the condition is if your intention is to built a home in the plot then you can easily get a loan but if your intention is to invest in the plot and make profit when the plot price goes up in future then there will not be any loan as well nothing tax benefits.

So, lenders often require proof that you plan to build a home on the plot. You can show this with an approved building plan, construction estimates, or a detailed project plan.

Lender will give you a timeline on the basis of time you need to start the construction.

The main requirement is that the plot should be for residential use. Lenders want to ensure the plot will be developed into a home, not left empty or used for commercial purposes.

Some lenders offer plot loans that can be turned into home loans once you start building. You need to begin construction within a set time after receiving the loan.

What is the Eligibility Criteria for Plot Loans?

The lender will evaluate plenty of things like how much you earn, ability to repay the loan, stable income, credit score, co-applicant details and other for plot loans and also they will evaluate the plot location, legal status, quality, seller, price and other things. The eligibility criteria are more stringent in case of a plot loan.

The below eligibility criteria are general criterias for your understanding. The requirement can change lender to lender. It’s advisable to check every lender criterias individually.

• Must be a resident of India

• You should be an adult (18) and between the ages 21 to 65 years.

• a 750 or above credit score will be preferred.

• NRIs are also applicable but they should still own Indian Citizen, Passport and other relevant documents as needed.

• You should be a salaried or self-employed individual with an income minimum 25,000 and a stable source of income.

• LTV Ratio: Usually up to 75%-80% of the plot’s value.

• The plot should be located in a municipality or corporation.

Conclusion

Plot loans are a good option for buying land and building your dream home. By knowing how plot loans work, including eligibility, application steps, and risks, you can make a smart choice that fits your financial goals.

How can EazyBankLoan help you in taking a loan? We understand the process of procuring a loan can be stressful. That is why we take care of your Loan application process, saving you time and hassle by handling the paperwork and communication with the loan providers.

Check the details here at EazyBankLoan

Need help? Reach out at support@eazybankloan.com

Frequently Asked Questions (FAQ)

1. Can I get a plot loan for agricultural land?

• No, plot loans are typically offered for residential plots within municipal or local development authority limits.

2. Are plot loans available for NRI (Non-Resident Indian) borrowers?

• Yes, many banks offer plot loans to NRIs, subject to specific eligibility criteria and documentation requirements.

3. What is the maximum loan amount I can get for a plot loan?

• The loan amount is typically up to 70% of the plot's market value, depending on the lender and your credit profile.

3. Can I get tax benefits on a plot loan?

• Yes, you can claim tax deductions on the interest paid under Section 24(b) of the Income Tax Act, provided the construction is completed within five years from the end of the financial year in which the loan was taken.