Plot Loans Research Paper

Plot loan or land loans are the loans that are acquired specifically for the purchase of piece of residential or commercial land. These are different from home loans as in home loans are obtained for acquisition for a constructed property, under construction property or for a land which is likely to go under construction soon.

Risk Factor with Plot Loans:

There is always a risk factor associated with plot loans both for the borrower and the lender. The borrowers should properly check the documents of the plot as there is no scarce of cases where buyers are fooled by forge documents and ownership rights.

For the lenders, the risk factor is associated with the loan default. If the loan is defaulted then lender cannot sell or use the land immediately. It blocks the lender’s money at least for near future. This is a major reason that interest rates are higher and eligibility criteria are strict in the case of plot loans.

Difference

Some other parameters of Differences between a home loan and a plot loan are explained here.

• Type of the Property and Location: Plot loans comprise of two to three basic categories in which loans are sanctioned the categories are residential land loan, agricultural land loan, and commercial land loan. Each of them is different from each other in terms of interest rates, EMIs, approval, and preconditions. The location of the plot matters a lot. In most cases, the plot has to be located in the municipal or corporation limits. And for commercial land the compulsions are way taxing than the rest.

On the other hand, home loans are sanctioned regardless of the location and type. The interest rates are lower and you can also apply for a home loan for construction over a