Plot Loan Analysis

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Plot Loans Overview
A plot loan or a land loan is a type of credit or debt that is obtained specifically for the purchase of a piece of residential or commercial land. A plot loan is different from a home loan. Unlike a plot loan, a home loan is obtained for constructing a home on a plot of land or a land which is likely to go under construction soon, or for buying an apartment for residence in a society of flats under construction.

Documents Required for a Plot Loan:
The documentation for plot loans is fairly simple as it requires basic documents such as a duly filled application form, proof of ID and current address, most recent salary slips, bank statements for the last 6 months, Form 16, and a cheque for the loan processing fees.

Difference …show more content…

These categories are residential land loan, agricultural land loan, and commercial land loan. Each of them is different from one other in terms of interest rates, EMIs, approvals required and other relevant conditions. The location of the plot matters a lot. In most cases, the residential plot has to be within municipal or corporation limits. The requirements for commercial land loans are slightly more detailed as there are additional factors that define the land, the market segment of the purchaser, the end-use of the property and so on. These factors are again different for an agricultural plot …show more content…

This is one factor which separates home loans and plot loans quite distinctly. On a plot loan, the maximum tenure can only go up 15 years whereas on a home loan it can go up to a period of 30 years.

• Construction on the Plot: Most plot loans are refinanced to construct a house. This is because the plot loan usually is not sufficient to pay for the construction also in addition to the purchase of the land. Most banks have certain preconditions for such refinance. For instance, State Bank of India’s SBI Realty Loan scheme mandates that the owner has to start construction in the plot within 5 years from the date of allotment of the loan. Similarly, ICICI Bank states that the construction on has to be completed within a specific number of years from the date of getting the first disbursement of the loan.

Banks Offering Plot Loan:
In India, all the major private sector and public sector banks offer plot loans at different interest rates under a wide range of schemes. The list of the major banks that offer such loans includes SBI, ICICI, PNB, Axis Bank, Union Bank, Indian Bank and DHFL, among

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