A Land Loan is a loan that is used to finance the purchase of raw land. Land Loans are typically more difficult to obtain than home loans. Usually, they carry higher interest rates and down payment requirements. Land Loans are also typically larger than Home Loans, as the value of the land itself is often much higher than the home’s value.
While Land and Home loans are used to finance property purchases, they differ. Land Loans are more difficult to obtain and usually have higher interest rates. They also tend to be larger than Home Loans, as the value of the land is often much bigger than the value of the home.
Who Are Eligible for Land Loans in India?
The eligibility criteria for a Land Loan depend on the bank you choose and the type of land you own. Land Loans are a great way to raise quick capital, but they can be costly. Usually, you need to have been a landowner for at least three years and have a proper title. Sometimes, you may need to establish that you have already built on the land or have the money to build on it. In any case, the bank should help you establish your eligibility with a credit check. You can check out the interest rates from the House Loan calculator given on our website.
What Kind of Property Is Covered Inside the Land Loan?
A Land Loan is given to buy land. Land Loans are offered through banks and NBFCs at nominal interest rates and with easy repayment options. There are no restrictions on land use, and the land secured through a Land Loan can be used to construct a residential or commercial property.
Location of the Property:
The property’s location is an important factor that lenders consider when approving a land loan. The land must be within the corporation or municipal limits and have clear differentiation (for example, a boundary wall). This ensures that the lender can easily identify the property during a visit.
What Is the Minimum Amount of Loan One Can Get if They Go to Take Land Loans?
The minimum Land Loan amount depends on the property value and the land area you buy. In India, private and commercial banks offer these loans. The criteria for getting a Land Loan typically include the property’s value and your credit history. If you have a good credit history, you will have an easier time getting a loan for a land purchase. Private banks typically lend up to 80% of the property’s value. Public sector banks typically lend up to 75% of the property’s value.
Loan Tenure for Land loans:
In India, the loan tenure for Land Loans is typically 5 to 20 years. The interest rate on Land Loans is usually higher than the interest rate on Home Loans. However, this varies depending on the lender. Land Loans are typically used for the purchase of agricultural land. However, they can also be used to purchase vacant land for development purposes.
Also Read: Similarities Between Home Loans And Land Loans
No Tax Benefits:
A Land Loan does not offer the same income tax benefits as a Home Loan. Repayment of the loan principal and interest payments on a self-occupied property are deductible under sections 80C and 24b, respectively. However, there is no such tax benefit available for a Land Loan.
Major Differences Between a Land Loan and a Home Loan:
There are several key differences between Land loans and Home loans. One of the most important is that Land Loans are typically much more expensive than Home Loans. Land is considered a more risky investment than a home, and lenders charge higher interest rates to offset this risk.
Another key difference is that Land Loans typically have shorter terms than Home Loans. This is because lenders want to minimise risk by ensuring that the loan is paid off as quickly as possible. As a result, Land Loans often have higher monthly payments than Home Loans.
Finally, Land Loans typically require a larger down payment than Home Loans. This is because lenders want to minimise their risk by ensuring that the borrower has a significant amount of equity in the property.
A Land Loan is designed to help you finance the purchase of a piece of land, which can then be used to create a home. Depending on the terms of the Land Loan, you might be able to use the loan to purchase the land and then apply for a Home Loan later on to finance the construction.
Resource from: https://thepublishingherald.com/2022/08/30/similarities-between-home-loans-and-land-loans/