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Land Loans 2024 - Interest Rates & Features
Banks and Non-Banking Financial Corporations (NBFCs) offer land loans or plot purchase loans to individuals or businesses so they can buy a plot of land for residential or commercial use.
There are several banks that offer home loans to the applicants as per the bank specific eligibility criteria. The home loans come at a wide range of interest rates and enable borrowers to repay the loan within a maximum tenure of up to 25 years. Here are more details about plot loans.
Land Loan Interest Rates 2024
| Banks | Interest Rate (p.a.) |
|---|---|
|
SBI Land Loans |
9.40% - 9.85% |
|
HDFC Land Loans |
9.40% - 9.95% |
|
Federal Bank Land Loan |
8.80% onwards |
|
Shriram Housing Finance |
Starting from 9.5% |
|
PNB Housing Land Loan |
9.5% onwards |
|
Karnataka Bank Land Loan |
9.30% - 11.45% |
|
Bank of Maharashtra Land Loan |
8.35% - 10.90% |
Compare: Home Loan Interest Rate all Banks
Note: The EMI is calculated after considering the loan amount to be Rs.1 lakh, tenure being 120 months and the interest being the lowest as mentioned in the table above.
Land Loan EMI Calculator
Using an EMI calculator will help you in knowing the amount which needs to be paid as EMI once you avail the plot loan. All you need to do is enter the loan amount, tenure in months, the interest rate and the processing fee and click on ‘Calculate’.
What is Land Loan?
Plot loans are a unique banking product designed to facilitate the purchase of a plot of land. Also known as land loans, it is often confused as being same as a home loan. The difference between land and home loans is that a plot loan can be availed for the purchase of the land where the house will be constructed later.
Features of Land Loan
The following are the significant features of Land loan:
- Loan tenure: The lenders usually provide a loan tenure for repayment for a duration ranging between 10 to 20 years. The lender considers the repayment capacity of an applicant while deciding the loan tenure and requires their applicants to maintain their monthly EMI contribution.
- Loan-to value ratio: LTV is the proportion of the plot value that can be financed by loan and up to 80% of the loan value is offered as LTV by the lenders. The credit risk assessment undertaken by the lender determines the final LTV ratio. The location of the plot, market value of the property, and the credit profile and repayment capacity of the borrower are considered while undertaking credit risk assessment.
- Tax benefits: repayment of principal and interest components of the plot loan are not eligible for tax deductions. A home loan availed for constructing the residential property on the plot purchased through plot loan by the borrower is eligible for tax deductions.
- Balance Transfer Facility: Plot loans borrowers can avail themselves of home loan balance transfer facility on the existing plot loans. This way borrowers can transfer their outstanding loan amount to other lenders at an affordable rate. Availing balance transfer facility depends on credit risk assessment of the applicant performed by the new lender.
- Prepayment charges and processing fees: The processing fees for plot loan ranges from 0.25% to 1.50% of the loan amount. Lenders are barred by the Reserve Bank of India (RBI) to charge prepayment fees on floating rates loans but free to charge on fixed rate loans.
What are Benefits of Taking Land Loan?
Some of the benefits of availing plot loans are listed below:
- Can be availed for purchase of residential land
- Attractive interest rates
- Affordable repayment tenures
- No pre-payment penalty
- Processing fee is low
- Minimal documentation
- Tax benefit under Section 24 and 80C of Income Tax Act
What is the Eligibility Criteria for Land Loan?
The eligibility criteria which needs to be fulfilled in order to avail a plot loan are listed below:
- Must be a resident Indian
- Should be a salaried or self-employed applicant
- Should be between 18 and 65 years of age
- Compare: Plot Loan Eligibility
Note:
- NRIs can only apply for housing loan
- Loan applicants must have a credit rating of 750 or higher depending upon the lender to get their loans approved
What are the Documents Required to Apply for Land loans?
Listed below is the list of basic documents which you will need to furnish while applying for a plot loan. The documentation requirements are subject to change depending on the eligibility criteria laid down by different lending institutions.
- Duly filled Application form
- Applicant’s photograph
- Age proof of the applicant
- Proof of Identity
- Proof of Residence
- Most recent salary slips
- Bank statement for the last 6 months
- Form 16
- Cheque for loan processing fee
- Also, you may be required to provide the following land documents.
Additionally, you may also be required to provide the following documents pertaining to the land.
- Original documents pertaining to ownership of the land
- ‘No Encumbrance’ Certificate for the plot
- Layouts / drawings of the plot, duly approved by the Town Planning Authority.
- Revenue receipts
- Land records
- Tax receipts for taxes paid by the landowner
Get Checklist: Documents Required for Home Loan
How to Get Tax Exempted from Land Loan?
Here are the following details regarding the tax exemptions for Land loans:
- Tax exemptions can be availed only if you construct house on the plot
- Once the construction is completed, then only you can avail yourself of the tax deductions on plot loan
- Tax deduction of Rs.1.50 lakh per annum which is on the principal repayment component can be availed as per Section 80C
- Under Section 24, tax benefit can be availed on the interest of the plot loan after completion of house construction and once you start residing in it
- Convert the plot loan into a regular home loan to become eligible for an annual deduction of Rs.2 lakh as per Section 24 of the Income Tax Act
- For pre-construction, you can also avail reduced interest rate and interest rate deduction
What are the differences between Land Loan and Home Loan?
The following is the list of differences between plot loan and home loan:
| Home Loan | Land Loan |
|---|---|
|
Loan provided for buying under constructed or constructed property |
Provided for the purchase of plot for residential purposes |
|
Tax benefits offered on both interest payment and principal |
Tax benefits offered to cover the construction cost only |
|
Loan repayment tenure is up to 30 years |
Loan repayment tenure is up to 15 years |
|
LTV varies between 75% to 90% |
LTV varies between 75% to 80% |
FAQ (Frequently Asked Question)
A land loan is a financing option that allows you to purchase a plot of land. This can be for future residential or commercial construction or as an investment.
Eligibility criteria typically include a minimum age, a steady income source, and a good credit score. Specific requirements may vary depending on the lender.
Common documents required include:
- Proof of identity (Aadhar Card, Passport, etc.)
- Proof of income (salary slips, bank statements, etc.)
- Property-related documents (title deed, sale agreement, etc.)
- Proof of residence (utility bills, rental agreement, etc.)
The maximum loan amount depends on various factors including the value of the land, your income, and the lender’s policies
The tenure for a land loan can vary from 5 to 15 years, depending on the lender and the loan amount.
Land loans are generally available for residential and commercial plots. Loans for agricultural land may have different terms and eligibility criteria.
Interest rates for land loans can vary based on the lender, loan amount, and tenure. It is advisable to check with the lender for the most current rates.