A plot loan, also known as a plot purchase loan or land loan, is a kind of loan provided by various banks and non-banking financial corporations to businesses or individuals to purchase a plot of land. This loan is particularly designed to assist individuals in purchasing a plot of land for various purposes, such as investing in real estate, developing commercial property, or constructing a house.

In this blog, we will take a look at the different financing options for buying open plots in Jadcherla, along with other relevant information regarding plot and land loans.

Features of a plot loan or land loan

The following are the significant features when it comes to a plot loan:

• Loan tenure: he lenders usually offer a loan tenure for repayment for a duration ranging between 10 and 20 years. The lender typically considers the repayment capacity of an applicant before deciding the relevant loan tenure and also requires their applicants to maintain their monthly EMI contribution.
• Loan-to-value ratio (LTV is the proportion of the plot or land value that can be financed via loan, and up to 80% of the loan value is offered as an LTV by the lenders. The lender typically undertakes a credit risk assessment, and based on that, they determine the final LTV ratio. The key aspects that are taken into account while undertaking the credit risk assessment include the market value of the property, the location of the plot, and the repayment capacity and credit profile of the borrower. Tax benefits: Repayment of the principal and interest components of the plot or land
• Tax benefits: Repayment of the principal and interest components of the plot or land loan are not eligible for tax deductions. A home loan that's used for constructing a residential property on the very plot purchased through a plot loan by the borrower is only eligible for tax deductions.
• Balance transfer facility: Plot loan borrowers can avail themselves of a home loan balance transfer facility for already existing plot or land loans. This way, borrowers can transfer their outstanding loan amount to other lenders at an affordable rate. When it comes to availing of the balance transfer facility, you should be aware that it depends on the applicant's credit risk assessment performed by the new lender.
• Prepayment charges and processing fees: The processing fees, when it comes to plot loans, range from 0.25% to 1.50% of the loan amount. Lenders are prohibited by the Reserve Bank of India from charging prepayment fees on floating-rate loans but are free to charge on fixed-rate loans.

Loans for land or plot purchases offered by various banks and financial institutions in India

Let's take a look at the different plot loans offered by some of the most renowned banks and financial institutions in India:

DHFL (Plot Loan)

Key highlights:

• Both Indian and non-Indian residents are eligible for this loan.
• This particular loan scheme is available to both self-employed and salaried individuals.
• You can also add a co-applicant to increase the loan amount.
• The land you purchase with the sanctioned loan amount is going to be used as security for this loan.

Penalties/internal charges:

• Any ECS or cheque bounces will attract a fee of INR 500 plus GST.
• You will be charged 18% p.a. on your outstanding dues if you default on your payments.
• Fetching the foreclosure statement attracts a charge of INR 500 plus GST.
• You will be charged INR 500 plus GST to get a copy of your property documents.

HDFC Bank (Plot Loans)

Key highlights:

• You can borrow the HDFC Bank Plot Loan to purchase a resale plot of land, a plot through direct allotment, or to transfer your loan from another bank or financial institution.
• This loan is available for both self-employed and salaried individuals.
• Only Indian residents can apply for this loan, unlike the one from DHFL.
• You get expert technical and legal counseling when you opt for this loan.

Penalties/internal charges:

• Any delayed payments of interest or EMI will attract an additional penalty interest rate of 24% p.a.
• You are going to be charged INR 200 for check dishonors.
• Increasing or decreasing your loan term will incur a charge of up to INR 500 plus taxes.
• If you decide to switch between schemes, you'll be charged a conversion fee.

Federal Bank (Purchase of House Plots)

Key highlights:

• The Federal Bank Purchase of House Plots Loan is available for those who have a desire to construct a house on the plot they have purchased.
• This loan is available to self-employed individuals, salaried employees, and business persons.
• You can expect a quick loan approval process with this particular loan.
• The repayment for this loan can be done in the form of EMIs.

Penalties/internal charges:

• In the event of delayed payments, you will have to pay an additional penalty interest rate of 2% per month on the overdue amount.
• Switching a loan from a floating rate to a fixed rate, and vice versa, attracts a conversion charge of 0.25% on the outstanding balance or drawing power, depending on which one's higher.

State Bank of India (Realty Home Loan)

Key highlights:

• The State Bank of India Realty Home Loan is available only for Indian residents.
• If you're a female applicant, you'll be eligible for an interest concession.
• The interest rates offered on this loan differ depending on the loan amount you wish to borrow and the type of borrower category you fall under.

PNB Housing (Residential Plot Loan)

Key highlights:

• The PNB Housing Residential Plot Loan provides financing for the purchase of a residential plot in any urban area.
• You cannot be more than 70 years old at the time of loan maturity.
• You'll be required to contribute a minimum of 10% of the cost of the total property. This is inclusive of stamp duty and registration charges.
• The funding you'll receive from PNB Housing depends on the loan amount and the market value of the plot you're willing to buy.

Canara Bank (Canara Site Loan)

Key highlights:

• The Canara Bank Site Loan is available for those individuals who wish to purchase housing sites from Central and State Government authorities, town planning development authorities, or any relevant body constituted by the Government of India.
• This loan is available to both residential and non-resident Indians.
• You need to be less than 60 years old at the time of applying for this loan.
• The margin offered is going to be 25% on the project.
• The security of the loan is the property you will be buying with the sanctioned amount you receive from Canara Bank.

What are the benefits of taking out a plot loan?

Some of the major benefits of opting for a plot or land loan if you're looking to purchase plots for sale in Jadcherla are as follows:

• Attractive rates of interest
• Affordable repayment tenures
• The processing fee is low
• Minimal documentation
• Can be used for the purchase of residential land
• No prepayment penalty
• Tax benefits under Sections 24 and 80C of the Income Tax Act

Eligibility criteria for a plot loan

If you're looking to avail a plot or land loan to purchase open plots in Jadcherla, you need to fulfil the below mentioned eligibility criteria.

• Must be a resident of India
• Should be between 18 and 65 years of age
• Should be a self-employed or salaried applicant

Note:

• NRIs, however, can only apply for housing loans and not plot or land loans.
• Loan applicants need to have a credit rating of 750 or higher, depending on the lender, to get their loans approved.

What are the documents required to apply for plot or land loans?

If you're someone who's looking to purchase open plots for sale in Jadcherla, then you'd certainly need to apply for a plot or land loan in case you don't have enough finances already.

Now, when it comes to applying for this loan, you'd need to showcase some essential documents. The most common documents that the majority of lending institutions ask for are as follows:

• Duly filled out the application form
• Photograph of the applicant
• Proof of identity
• Age proof of the applicant
• Proof of residence
• Most recent salary slips
• Form 16
• Cheque for loan processing fee
• Bank statements for the last six months
• Original documents pertaining to the ownership of the land
• "No Encumbrance" certificate for the plot
• Land records
• Revenue receipts
• Tax receipts for taxes paid by the landowner
• Layouts and drawings of the plot that have been duly approved by the Town Planning Authority

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Conclusion

Depending on the bank or financial institution, you can apply for a plot or land loan either offline or online. If you wish to opt for an online channel, you are going to have to visit the bank's official website and check whether they allow online applications or not. If they do, you might be required to fill in several details in the online application form. If the bank doesn't accept online applications, you can always visit their nearest branch and request an application form. It is important to discuss the fine print of the loan with someone from your chosen bank. You will need to clarify your doubts before you seal the deal.