Banks and financial institutes offer “Land Loan” or “Land Purchase loan”. A land
loan is a financing option that is meant to be used just for the purchase of
land. These loans are available for purchasing land for both construction and
investment purposes. The quantum of loan sanctioned, depends on a number of
factors like the cost of house/flat, person’s age while applying for loan,
income, repayment capacity etc. However, any individual aged 21 years or above
having regular income is generally eligible to apply for land loan.
Banks usually insist that the land you are buying, whether it is for your house or for commercial purpose, should be from a development authority or from a society, implying that it should be legally safe land. Even if banks were willing to provide a loan for a plot of land, it may come at a higher cost and not at the home loan cost which is considerably cheaper than a plot loan. One thing that you must remember is that there are no tax sops if you take a loan to buy a plot of land. Normally, lenders will not finance more than 60-70 per cent of the total cost of the plot and the remaining has to come from your sources.
If you build a house on that plot of land, you will be eligible for both Land loan and Home construction loan. Land loan enables you to buy plot of land and Home construction loan enables you to construct the home in the plot you purchased.
Banks usually insist that the land you are buying, whether it is for your house or for commercial purpose, should be from a development authority or from a society, implying that it should be legally safe land. Even if banks were willing to provide a loan for a plot of land, it may come at a higher cost and not at the home loan cost which is considerably cheaper than a plot loan. One thing that you must remember is that there are no tax sops if you take a loan to buy a plot of land. Normally, lenders will not finance more than 60-70 per cent of the total cost of the plot and the remaining has to come from your sources.
If you build a house on that plot of land, you will be eligible for both Land loan and Home construction loan. Land loan enables you to buy plot of land and Home construction loan enables you to construct the home in the plot you purchased.
