6 things you need to know about loan for land purchase

If you’re reading this, you’re probably considering investing in land to diversify your portfolio. Before you read on to understand financial assistance from banking institutions, pat yourself on the back for making a smart choice. Buying land in this day and age is your answer to creating intergenerational wealth. Understanding both, the eligibility criteria and interest rate options, will help you make an informed decision and find the best financing solution for your land purchase.?

Part I: What is a land / plot loan? ?

Specially designed to finance the purchase of a plot or a piece of land, it is typically used by individuals or entities who want to buy land for personal or commercial purposes such as building a house, developing a property etc.

It often requires a down payment, proof of income, and a good credit score to be eligible. The loan amount and the interest rate will depend on various factors including the lender, the value of the land, and the borrower's financial profile.?

Part 2: Different types of plot loans ?

The two types of plot loans that one must look for before making a choice are:

Plot purchase from statutory authorities - When purchasing land from local development authorities, government bodies, etc., financing is available under the category of "Plot Purchase from Statutory Authorities". Banks and financial institutions offer loans that can cover up to 75% of the purchased land's value, with a repayment period of up to 15 years.?

Composite loan – This is a combination of a plot purchase loan and a construction loan for those who plan to construct a residence on the purchased land within three years. The lending institution will allow 60% of the loan amount to be used for the plot purchase and the remaining 40% for construction. The repayment period for a composite loan can be up to 30 years.?

Having mentioned this, The House of Abhinandan Lodha? (HoABL) has tied up with Easiloan which makes the entire loan buying process smooth and easy for the customers. Also, since not all banks provide plot loans, HoABL’s partnership with Easiloan team enabled established banks to disburse loans across projects. This has made land buying accessible to a large set of customers, and empowered them with an asset class that’s much ahead of its curve.

This also comes with multiple benefits such as:

- A dedicated single POC through the process

- Hassle free documentation process

Part 3: How is a land loan different from a home loan? ?

Plot loan interest rate ?

Plot loans are typically offered by lenders with floating interest rates that vary based on the borrower's credit score, monthly income, occupation, employer profile, loan amount, etc. It is important to compare plot loan interest rates and terms offered by different lenders to find the best loan option.?

Below is the list that compares plot loan interest rates of leading financial institutions.

Part 4: What are the eligibility criteria & documents required for a plot loan? ?

You must meet certain eligibility criteria set by the lender. You may be required to provide a range of financial and personal documents to support your loan application. It is important to carefully review the eligibility criteria and document requirements before applying for a Plot Loan.?

Eligibility criteria for plot loan ?

The criteria for loan eligibility of salaried and self-employed individuals are as follows

Part 5: Documents required to apply for plot loans

The common documents for salaried and self-employed professions to complete their loan KYC are as follows -?

• PAN card and Aadhaar cards (mandatory if income is considered for loan eligibility calculation)
• Voter ID card or a valid passport
• Driving License
• Utility bills like electricity, telephone, post-paid mobile, and water
• Ration card
• Copy of a bank statement or Passbook with the address mentioned on it
• Valid Sales Deed or Rent Agreement

Other loan on land documents to be kept handy depending on their nature of work are as follows:

A. Salaried Individuals:?

• 2 months of salary slips or a salary certificate buyer agreement/allotment letter
• Title deeds
• Company letterhead for income details for a salary up to Rs.30,000 per month
• Bank statements for the past 3 months (from salary account)
• If variable components like overtime and incentives are present, salary slips for the past 6 months are required

B. Self-Employed Professional:?

• Qualification certificate (for professionals like CA, doctors, or architects)
• Income tax returns with computation of income for the asked number of years
• P/L account details with all schedules and audited balance sheet (if applicable)
• VAT or Service Tax returns or TDS Certificate
• Bank statement for the past 6 months (from savings, current, or O/D account)

C. Self-Employed Non-Professional:?

• Last 2 years of income tax returns with computation of income
• Last 2 years of P/L account with all schedules and audited balance sheet (if applicable)
• VAT or Service Tax returns or TDS Certificate
• Bank statement for the past 6 months or as asked by the bank (from savings, current, or O/D account)

Part 6: Features and Benefits of Plot Loans ?

• Competitive plot loan interest rate
• Low processing fees
• No prepayment penalties
• Transparent, no hidden charges
• Repayment period of up to 15 to 30 years
• Possible concessions for female borrowers
• Affordable repayment tenures
• Tax benefit under 80C of Income Tax Act

In conclusion, a loan to purchase land can be a great investment opportunity to create Inter-generational wealth. HoABL team provides all-around solutions to buyers in availing of extended service and support on getting a plot loan with ease at one of the best interest rates facilitated by banks in record time. In addition, it provides its services online, making it easier for buyers to start their journey. Ultimately, a loan to purchase land can be a step towards securing financial stability and growth in the long run.