Plot loans are, as their name suggests, a loan provided by lenders to borrowers looking for a plot to build a home. Most of the top Indian banks offer these loans at a specific interest rate that the borrower selects, depending on their requirements.

You’ve come to the right site if you’re a borrower hoping to gain a deeper grasp of the “plot loan.” You may learn everything you need to know about a land loan from us through this page.  

Plot loans: an explanation and use

A plot loan is any loan a buyer asks a lender to purchase a piece of land anywhere in India. Purchasing land chunks and plots on which to develop a residential unit is made possible by banking institutions in India. It is also important to understand that this loan is solely for land purchase. The borrower would not be eligible to apply for the bank’s land or plot loans if he intended to construct a commercial structure or utilize the land for farming.

Advantages of plot loans

In addition to giving customers a chance to purchase a piece of land at a competitive plot loan interest rate, land loans also allow them to qualify for tax deductions under Sections 80C and 24 of the Income Tax (IT) Act. The borrower won’t be charged any pre-payment fees if they can settle the loan before the term is over, which is another benefit of plot loans in India.

Eligibility for a Plot Loan

The buyer must be an Indian resident who is employed or self-employed to be eligible for a plot loan interest rate. His age must be at least 18 when he applies for the loan. However, lenders like PNB Housing provide plot loans to candidates at least 25 years old. While banks have different standards in this area, they normally do not grant plot loans to borrowers over 65.

How to Get a Plot Loan Tax Exempted?

Only if a house is built on the plot can you take advantage of tax benefits on your plot loan interest rate. Only after the construction is finished are tax deductions possible. You may deduct the principal repayment component up to a maximum of Rs. 1.50 lakh annually under Section 80C of the Income Tax Act.

After the house’s construction is complete and you begin living there, Section 24 of the loan’s terms allows you to receive tax benefits on the interest component of the loan. You are entitled to a 2 lakh rupee annual deduction under Section 24 of the Income Tax Act. To obtain that, you must convert the plot loan into a standard home loan.

You must also take advantage of interest rate reductions and lower interest rates for pre-construction addition to this.

What distinguishes a home loan from a plot loan?

● Unlike home loans, available on all properties, plot loans are solely available for residential plots.

● When it comes to plot loans, a maximum Loan to Value (LTV) of 70% is required. In extreme circumstances, the LTV for mortgage loans might reach 90%.

● Most of the country’s banks do not issue plot loans to Non-Resident Indians (NRIs).

● Land loans have a shorter repayment period than mortgage loans.

Loans for buying land are available from all reputable Indian banks at competitive rates. Notably, these banks provide loans to purchase a plot and construct a unit on that plot. The amount is not just intended to purchase a plot. 

Also Read: How hard is it to get a personal loan?

Leave a Reply

Your email address will not be published. Required fields are marked *