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Plot Loan

Are you looking to buy a plot? Do you need a loan to get it financed? Read on to find out all about plot loan, land loan interest rates, and the eligibility criteria for a loan against plot to make a well-informed choice. Understand whether a home loan on plot gets you tax benefits and check free CIBIL score to assess how much loan you can get. 

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Plot Loan Online

A plot loan is granted by banks and other financial institutes to eligible applicants so that they can build their dream homes at their convenience.

By availing of these loans, you can buy a residential plot to make your home in the future. Banks offer attractive interest rates that allow the customers to pay reasonable EMIs every month until the end of their selected tenures. In general, the tenure goes up to 25 years, depending on your affordability. 

Plot loans and home loans are often used as synonyms by many people. However, these are two different types of loans that are granted by banks and financial institutes for different purposes. The intention may be similar, the procedure and the reasons unique for both types of loans. 

If you are intending to apply for a plot loan soon, here is all you need to know regarding its application procedure, eligibility criteria, different types, and more.

Tip - Check Your Cibil Score before applying for a plot loan

What is Plot Loan?

A plot loan is granted to those who primarily want to buy land and build their home there in the future. Plot loans are granted by several banks and other institutes.

Plot loans are designed mainly for those who want to purchase land for future purposes. It is also called a land loan.

The land is a great thing to invest in, for it increases its value over time. Therefore, at the resale, it can give an immense return to the seller.

The repayment of plot loans is mainly made in the form of monthly instalments during a selected tenure that the borrower chooses before getting the loan from the lender. Loan for plot purchase had emerged in India a long time back. People used to buy for several purposes. Building one’s own home is still one of the predominant reasons why most people get plot loans.

Also Read - What is a Home Construction Loan and How is it Different from a Plot Loan?

Plot Loan Interest Rates of Different Banks

The loan to buy plot is a procedure that does not remain the same for all banks and financial institutes in the country.

Several banks offer different interest rates to their customers when it comes to plot loans. 

If you are intending to apply for a plot loan soon, take a look at the chart below to understand and analyse different interest rates, offers, tenure, and other details.

Bank NamesInterest Rate for Plot Loans
ICICI Bank Plot Loan7.0%-7.80%
Federal Bank Plot Loan7.65%-7.80%
SBI Plot Loan7.50%-7.70%
Karnataka Bank Plot Loan10.89%-12.9%
Maharashtra Bank Land Loan6.95%-7.25%
HDFC Bank Plot Loans7.05%-7.95%
PNB Housing land loans8.55%-10.55%
Shriram Housing Finance Plot Loans8.9%

ICICI Bank, Federal Bank, and HDFC Bank offer a similar plot loan interest rate. If you want to go for an even lower interest rate, consider checking out the Maharashtra Bank land loan offers.

Land loan interest rates differ from one bank to the other. Make sure you understand and analyse all different parameters before applying for a land loan in the future. It is a big commitment that you will have to fulfil after taking out a land loan. Therefore, go for the plan that fits your budget and suits your demands properly.

Also Read - Plot Loan or Flat Loan: Which is a better option?

Features of Land Loan

There are several unique features of a plot loan that you need to keep in mind if you want to apply for a land loan soon.

  1. When you take out a home loan on plot/ land loan, the usual interest rates always remain on the lower side compared to other loans.
  2. The processing fee of the entire procedure also remains on the lower side. Make sure you don't lose out on your loan amount as part of your processing fee.
  3. You do not have to pay any penalties beforehand. At your convenience, you can complete the loan without any penalties being charged to you.
  4. No hidden charges are involved in the entire procedure. You can apply for a loan by visiting the official website of your preferred bank or other financial institutes.
  5. The repayment duration can go up to 10 to 15 years, depending on your preferred bank.
  6. A continuous reduction takes place in the amount of interest you were supposed to pay on a monthly basis.

A loan against plot has a plethora of unique features that make it different from the other loans offered by banks.

Plot Loan EMI Calculator

Make sure you check your eligibility using a plot loan eligibility calculator to understand whether or not you are eligible to apply for plot loans.

In order to use a calculator, visit the online page of your preferred bank online. Then go to the section that covers land loans.

You will be asked to put all your personal as well as financial details so that they can examine whether or not you are eligible to apply for a land loan at the moment.

Land loans are generally huge amounts that you have to repay for a prolonged period along with an added interest rate. Make sure you calculate your finances beforehand and make a solid strategy to manage your expenses during the repayment period of your land loan.

Get access to EMI Calculator

What is the Eligibility Criteria for Plot Loan?

There are several factors that affect your loan application notice examined by your preferred lender.

The eligibility criteria that need to be maintained if you want to apply for a plot loan are listed below:

  • You must be an Indian resident in order to apply for land loans inside India.
  • You must be a self-employed or salaried individual with a stable source of income who can manage their expenses after taking a loan.
  • You must belong to the age group of 18 to 65 years to be able to apply for a land loan in India.
  • The loan tenure for your land loan remains around 15 years for most banks in the country. However, some banks also offer tenure of 30 years to their customers when it comes to land loans. You must choose a tenure that fits your budget properly without making you face any kind of financial troubles during the tenure.
  • In order to enjoy certain home loan tax benefits, you must have a good credit history.

Check free CIBIL score before applying for a land loan to analyse whether or not you are eligible to apply for that loan.

What are the Documents Required to Apply for Plot loans?

No matter whether you are a self-employed individual or a salaried person, there are some common and essential documents that you need to note before applying for a land loan. The main documents required for plot plan include:

  • Your proof of residence
  • Passport
  • Aadhar card
  • Your passport size photograph
  • Properly filled application form for A land loan
  • Salary slips from the past six months.
  • Bank statements for the last six months
  • A cheque for the loan processing fee that is charged
  • Revenue receipts
  • Ration card
  • Utility bills- postpaid mobile charges, electricity, water bill etc.
  • Driving license 
  • A valid rent agreement 
  • A letter from your employer 
  • Tax receipts for the last three months

Also Check - Documents Required for Home Loan

How to Get Tax Exempted from Plot Loan?

Since plot loans and home loans do not qualify as the same kind of loans, land loans cannot give you any such benefits. Your plot loan cannot be tax exempted completely due to the terms and regulations.

However, if you decide to build your house in the same plot that you bought after taking the land loan, a certain percentage of tax deduction can be applied. If you decide to resell this place, tax deduction too will not be applicable to you. A home loan against property construction will not bring you any tax deduction, and neither will your loan will be free from taxes in any situation.

Also Read - Tax Benefits on Second Home Loan

Residential Plot Loan

If you are a self-employed or a salaried individual who has a solid income source, you can easily apply for a residential land loan of up to Rs.1,00,00,000 in order to purchase empty land to construct your own house. You can purchase the place to build your house or you can also buy it for reselling purposes.

However, a home loan against property interest rates remains on the higher side if you decide to sell it.

Difference Between Plot Loan and Home Loan

The major differences between a home loan and a plot loan are as follows:

  • Fact that plot loans are granted to those who buy vacant lands to build their own houses or to resell them further to new buyers. Home loans, on the other hand, can only be used to purchase an already constructed house or apartment.
  • When you take a land loan, it has to be located within the municipality or your corporation's limits. Home loans, on the other hand, are more flexible. You can buy any property at any location of your choice when you take a home loan.
  • The maximum tenure for home loans can go up to 30 years. The maximum tenure for a land loan can only go up to 15 years.
  • The loan to value ratio for land loans remains around 80%. The LTV ratio for home loans remains around 90% depending on the lender.

Different Types of Plot Loan

The loan for plot purchases can be divided into several types depending on the mode of purchase followed by the buyer.

  • You can buy a plot through a reseller agent.
  • Or you can directly buy a plot from the housing society or the authoritative figure of the land.

Advantages of Taking a Plot Loan

If you dream of building your dream home one day in the future, taking a plot loan can be the smartest step towards your dream. It not only allows you to explore your desires financially but also offers you a loan at low-interest rates as well.

Buying your own land and building your property on your own is indeed the better way around getting your own home.

A constant reduction in your interest rate also takes place when you take a land loan. It gives you a secured future and helps you make financially informed decisions in the long run.

Also Read - 

How to Apply for a Plot Loan?

Visit your preferred bank's official website online. Put all the necessary personal and financial details first. Whether you are a salaried or self-employed individual has an immense role to play when it comes to the land loan interest rates.

Make sure you use an online EMI calculator to calculate and strategies your finances beforehand. If the available loan offers on the site seem feasible to you that fit your budget properly, apply for it and wait for a few days for its approval.

You can also apply for Plot Loan at MyMoneyMantra

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FAQs

✅ How is Land Loan different from Home Loan?

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To put it simply, a loan is granted to those who aim to build their house from scratch in a pick and place.

On the other hand, when you take a home loan, you can buy an already constructed house or apartment.

✅ What credit score is required to take a plot loan?

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If you have a credit score of 700 to 750, you will most likely get land loans without any hassle.

✅ How can I get a land loan with bad credit?

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If you have bad credit, convince your lender why you are a responsible borrower. If you have a stable source of income and no other financial obligations, make them understand how you can smoothly keep repeating your monthly EMIs, and other bills on time during the entire repayment period.

✅ Are NRIs eligible for plot loans?

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Yes, an NRI can easily apply for a plot loan similar to any other resident in India at any Indian bank or other financial institutes.

✅ Can a plot loan be converted to a home loan?

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When you have a home loan, a tax deduction is possible. However, with a land loan, tax deduction is not possible. Many people convert their land loans into regular home loans once the construction is completed. Simply submit the completion certificates of construction and your occupation details to your lender to begin the process.

✅ How long will it take for land loan approval?

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Wait for around 4 to 6 weeks after submitting your application to your lender.

✅ What is the maximum loan amount I can get from Land Loans?

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Most banks offer a minimum land loan of 8 lakh to the customers.

✅ What is the processing fee for land loans?

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Most banks charge a processing fee of 0.5% to 1%, which turns out to be around 10,000/-

✅ What is the maximum tenure of a loan for land purchase?

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Most banks allow their customers to take out a long loan for 15 years maximum.  However, a few banks are there that allow up to 30 years of tenures for exceptional applicants.

✅ What is the minimum CIBIL score required to take a plot loan?

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You need to have a CIBIL score of at least 700 to be eligible to apply for a plot loan.