When a person or an individual purchases the plot for investment or for constructing the house plot, loans can be availed from the bank. The borrower can avail of loans on the plot purchase from the bank. For the purchase of the plot, the bank can provide 80% of the property value as loans to the borrower. The plot loan requires the documents like identity proof, income proof of an individual, and documents of the land with clear titles. In approving the loans for the plot, banks are very cautious that the land should not be disputed. The disputed land or an illegal encroachment can lead to the buyer’s loss and the lender. If the plot is located in the extreme outskirts of the city or at an isolated location, then the borrower may not be eligible for availing of loans. The bank sends their member to physically verify the plot for the verification before the approval of the plot. It is ideal for building a house on the plot rather than just keeping it an investment purposes. The home loan can be availed for the construction of the house as well on the plot.
There are various housing schemes where the row houses are constructed on the plots and sold as row house projects. If the real estate developer is constructing the project, then, in that case, the loans can be approved easily by the bank. As the real estate developer purchases the land post, the developer takes various sanctions from the government authorities to construct the project and accordingly may also tie-up with the banks for the pre-approved loans for the project. The loan pre-approved by some prominent lenders increases the genuineness of the project, making it easy for the real estate developers to approve the loans. The home loans and the plot loans have similar eligibility criteria, documentation, and loan approval processes. The credit score also plays an important role in approving the home loan or plot loan process. The plots taken within the municipal jurisdiction are given higher preference for the loan approval process than those in the outskirts. The banks may reject only the plots in the extremely remote locations, or else the ones slightly away from the municipal jurisdiction may be approved by the banks for the loans.
Following are the features of plot loans:
- In the case of plot loans, the same loan cannot be used for buying agricultural land.
- The land should not be located in the industrial area or else village area.
- The tenure being approved for plot loan is usually 15 years.
- The income tax benefits can only be availed in case of the house being constructed on the plot. And after the construction of the house, only loans can be availed.
- The borrower can approve around 80% of the property value loans. While as remaining 20% needs to be paid upfront as a down payment.
- Loans can be availed if both the plot is purchased in the government scheme or else resale plot from an individual.
Following are the features for the home loans:
- The tenure for the home loan is 30 years.
- Income tax benefits can be claimed under income tax act 80C.
- In the case of joint home loans, if both are the earning members of the family, they both can avail of income tax benefits.
- Home loans can be available for houses purchased in government schemes, cooperative housing societies, or private real estate developers.
- The chances of the home loans being rejected due to an isolated or remote location are less. Thus chances of loans getting denied due to improper documentation or land dispute are less.
Conclusion:
Thus whether to opt for the house loan or else plot loan depends on an individual. The loans can be availed for housing and plot loans subject to clear land titles. The income tax benefits can only be availed in house property and not on the plot. Buying a plot and constructing a house rather than buying a flat can yield very high returns to an individual in the long term.
