Want to take a land loan to buy land? Know these important things first

Land Loan: Some people take land and build houses, while some buy ready-made flats or houses. If you also have such a plan and you have to take a loan, then decide whether you have to take a loan to buy a house or to take land to build a house. Keep in mind that home loan and land loan are different. While we will tell you the important things about land loan, we will give you information about the difference between home loan and land loan. If you are thinking of taking a land loan, then this information will be very useful for you.

Who can get land loan

  • Every person living in India can take home loan and land loan.
  • NRIs can get home loan but they cannot get land loan.
  • Land loan can be taken only by residents residing in India.

tax deduction claim

  • Tax deduction can be claimed under section 80C of the Income Tax Act on repayment of home loan principal and under section 24B on repayment of interest.
  • No such tax benefit is available on land loan.

What kind of property can I get

  • Home loan lending rules are flexible.
  • Land loan is available only for certain types of land.
  • Lenders generally prefer to fund lands allotted by development authorities.

land use status

  • The status of use of the land matters in getting the land loan.
  • Lenders prefer to give loan for residential land.
  • Land loan is not available for purchase of agricultural or commercial land.
  • Some special loans can be used to buy agricultural land but these loans are not easily available.
  • These loans are only for specific borrowers like marginal farmers or landless labourers.
  • Home loan can also be taken for property outside the municipal area.
  • Land loan is generally not available on land situated in village or industrial area. It should be located within the corporation or municipal limits and the land should also be clearly demarcated.

What is the maximum land loan that can be availed?

  • In case of home loan, the loan can be availed up to 90% of the value of the property.
  • The loan amount for land loan is less. Loans up to 70%-75% of the cost of the property can be given where the funding is for land purchase only.
  • If the loan applicant gets land purchase and construction loan, then more loan is available.
  • It would be better if the applicant arranges at least 30% or more amount for downpayment.

Rate of interest

  • The interest rate in home loan is very low.
  • Land loan is available at high rate.

how long the loan can be repaid

  • In case of home loans, the tenure to repay the loan can go up to 30 years.
  • The maximum loan repayment tenure in a land loan can be 15 years.

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