Plot Loans 2024 - Interest Rates & Features

Plot Loans 2024 - Interest Rates & Features

Jun 22, 2024

15 Mins

Banks and Non-Banking Financial Corporations (NBFCs) offer land loans or plot purchase loans to individuals or businesses for buying a plot of land for residential or commercial use. These loans come with varying interest rates and repayment tenures, usually up to 25 years, depending on the lender's criteria. Here are the details regarding plot loans.

Plot Loan Interest Rates 2024

BanksInterest Rate (p.a.)SBI Plot Loans9.40% - 9.85%HDFC Plot Loans9.40% - 9.95%Federal Bank Plot Loan8.80% onwardsShriram Housing FinanceStarting from 9.5%PNB Housing Plot Loan9.5% onwardsKarnataka Bank Plot Loan9.30% - 11.45%Bank of Maharashtra Plot Loan8.35% - 10.90%

Note: The EMI is calculated assuming the loan amount is Rs.1 lakh, tenure is 120 months, and the interest rate is the lowest mentioned above.

Plot Loan EMI Calculator

Using an EMI calculator helps determine the monthly installment to be paid once you avail of the plot loan. Enter the loan amount, tenure in months, interest rate, and processing fee, then click 'Calculate'.

What is a Plot Loan?

Plot loans, also known as land loans, are designed to facilitate the purchase of a plot of land. Unlike home loans, which are for buying constructed properties, plot loans are specifically for purchasing land on which a house may be constructed later.

Features of Plot Loans

  • Loan Tenure: Typically ranges from 10 to 20 years, based on the borrower's repayment capacity.

  • Loan-to-Value (LTV) Ratio: Up to 80% of the plot value can be financed. The final LTV ratio depends on the lender's credit risk assessment.

  • Tax Benefits: Principal and interest repayment on plot loans are not eligible for tax deductions unless a home loan is taken for constructing a house on the purchased plot.

  • Balance Transfer Facility: Borrowers can transfer their existing plot loan to another lender at a more affordable rate, subject to credit risk assessment.

  • Prepayment Charges and Processing Fees: Processing fees range from 0.25% to 1.50% of the loan amount. No prepayment charges on floating rate loans as per RBI guidelines, but fixed-rate loans may incur charges.

Benefits of Taking a Plot Loan

  • Can be used to purchase residential land.

  • Attractive interest rates.

  • Affordable repayment tenures.

  • No pre-payment penalty.

  • Low processing fees.

  • Minimal documentation.

  • Tax benefits under Sections 24 and 80C of the Income Tax Act.

Eligibility Criteria for Plot Loans

  • Must be a resident Indian.

  • Should be a salaried or self-employed applicant.

  • Age between 18 and 65 years.

  • NRIs can apply only for housing loans.

  • A credit rating of 750 or higher is generally required.

Documents Required to Apply for Plot Loans

  • Duly filled application form.

  • Applicant's photograph.

  • Age proof.

  • Identity proof.

  • Residence proof.

  • Recent salary slips.

  • Bank statement for the last 6 months.

  • Form 16.

  • Cheque for loan processing fee.

  • Land ownership documents.

  • No Encumbrance Certificate for the plot.

  • Approved layouts/drawings by the Town Planning Authority.

  • Revenue and tax receipts.

How to Get Tax Exemptions from Plot Loans

  • Tax exemptions are available only after constructing a house on the plot.

  • Post-construction, tax deductions on plot loan interest can be claimed.

  • Under Section 80C, a deduction of Rs.1.50 lakh per annum on principal repayment can be availed.

  • Under Section 24, tax benefits on interest can be claimed after house construction is complete.

  • Converting a plot loan into a regular home loan makes it eligible for annual deductions of Rs.2 lakh under Section 24.

  • Pre-construction interest rate deductions are also available.

Differences Between Plot Loan and Home Loan

CriteriaHome LoanPlot LoanPurposeBuying an under-construction or constructed propertyBuying a plot for residential purposesTax BenefitsOn both interest and principal paymentsOnly on construction costsLoan Repayment TenureUp to 30 yearsUp to 15 yearsLoan-to-Value (LTV)75% to 90%75% to 80%

Banks and Non-Banking Financial Corporations (NBFCs) offer land loans or plot purchase loans to individuals or businesses for buying a plot of land for residential or commercial use. These loans come with varying interest rates and repayment tenures, usually up to 25 years, depending on the lender's criteria. Here are the details regarding plot loans.

Plot Loan Interest Rates 2024

BanksInterest Rate (p.a.)SBI Plot Loans9.40% - 9.85%HDFC Plot Loans9.40% - 9.95%Federal Bank Plot Loan8.80% onwardsShriram Housing FinanceStarting from 9.5%PNB Housing Plot Loan9.5% onwardsKarnataka Bank Plot Loan9.30% - 11.45%Bank of Maharashtra Plot Loan8.35% - 10.90%

Note: The EMI is calculated assuming the loan amount is Rs.1 lakh, tenure is 120 months, and the interest rate is the lowest mentioned above.

Plot Loan EMI Calculator

Using an EMI calculator helps determine the monthly installment to be paid once you avail of the plot loan. Enter the loan amount, tenure in months, interest rate, and processing fee, then click 'Calculate'.

What is a Plot Loan?

Plot loans, also known as land loans, are designed to facilitate the purchase of a plot of land. Unlike home loans, which are for buying constructed properties, plot loans are specifically for purchasing land on which a house may be constructed later.

Features of Plot Loans

  • Loan Tenure: Typically ranges from 10 to 20 years, based on the borrower's repayment capacity.

  • Loan-to-Value (LTV) Ratio: Up to 80% of the plot value can be financed. The final LTV ratio depends on the lender's credit risk assessment.

  • Tax Benefits: Principal and interest repayment on plot loans are not eligible for tax deductions unless a home loan is taken for constructing a house on the purchased plot.

  • Balance Transfer Facility: Borrowers can transfer their existing plot loan to another lender at a more affordable rate, subject to credit risk assessment.

  • Prepayment Charges and Processing Fees: Processing fees range from 0.25% to 1.50% of the loan amount. No prepayment charges on floating rate loans as per RBI guidelines, but fixed-rate loans may incur charges.

Benefits of Taking a Plot Loan

  • Can be used to purchase residential land.

  • Attractive interest rates.

  • Affordable repayment tenures.

  • No pre-payment penalty.

  • Low processing fees.

  • Minimal documentation.

  • Tax benefits under Sections 24 and 80C of the Income Tax Act.

Eligibility Criteria for Plot Loans

  • Must be a resident Indian.

  • Should be a salaried or self-employed applicant.

  • Age between 18 and 65 years.

  • NRIs can apply only for housing loans.

  • A credit rating of 750 or higher is generally required.

Documents Required to Apply for Plot Loans

  • Duly filled application form.

  • Applicant's photograph.

  • Age proof.

  • Identity proof.

  • Residence proof.

  • Recent salary slips.

  • Bank statement for the last 6 months.

  • Form 16.

  • Cheque for loan processing fee.

  • Land ownership documents.

  • No Encumbrance Certificate for the plot.

  • Approved layouts/drawings by the Town Planning Authority.

  • Revenue and tax receipts.

How to Get Tax Exemptions from Plot Loans

  • Tax exemptions are available only after constructing a house on the plot.

  • Post-construction, tax deductions on plot loan interest can be claimed.

  • Under Section 80C, a deduction of Rs.1.50 lakh per annum on principal repayment can be availed.

  • Under Section 24, tax benefits on interest can be claimed after house construction is complete.

  • Converting a plot loan into a regular home loan makes it eligible for annual deductions of Rs.2 lakh under Section 24.

  • Pre-construction interest rate deductions are also available.

Differences Between Plot Loan and Home Loan

CriteriaHome LoanPlot LoanPurposeBuying an under-construction or constructed propertyBuying a plot for residential purposesTax BenefitsOn both interest and principal paymentsOnly on construction costsLoan Repayment TenureUp to 30 yearsUp to 15 yearsLoan-to-Value (LTV)75% to 90%75% to 80%

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