Every person wants to acquire a piece of land. However, there are many hurdles in obtaining a land and getting a loan for land. Building a new house or a property can be appealing but there are few factors to consider before buying land or getting a land loan.
Factor Influence land loan
Fundamentals of land
- The first step is to properly plan on what the potential purchase entails.
- It is important for every buyer to get its boundaries marked by the people who do a survey and to have everything on paper ready as a blueprint of your plan.
- The other thing to keep in mind is to know about the various laws of land made by the government and to know about various land restrictions.
- Before buying the land or getting a loan for it, make sure about factors such as
- Cable connection
- Public road access etc.
Use of the land
- Another important aspect to keep in mind is the use of land.
- You should first be clear about the use of the land.
- The use of land has an effect on factors such as
- The term of the loan
- Down payment, and
- Interest rate
These factors have a direct link with the risk exposure of the bank. This makes getting bank loan more complicated than buying an existing house.
Selecting a loan option
- If you have planned to get a loan for land, then you also have to think about the loan options.
- If the market is cool and the seller is able to unload the land, then you must go with seller financing.
- Another option is to get a loan from local banks and credit unions.
- Usually, they offer better terms as they have market knowledge about the property.
- If you have an existing property and little debt you may go for a home equity loan.
- Home equity loans provide you with better terms.
Compare Loan Options
HDFC Land Loan
- The loan is provided for the purchase of a plot through direct allotment.
- The loan is given for transferring your outstanding loan availed from another bank or financial institution.
- No hidden charges are taken by the bank.
- Expert counseling is also available for legal and technical purposes.
- Easy repayment options to suit your needs.
- Attractive and affordable interest rate is charged.
- Any person can apply individually or jointly for the land loans. One thing to be kept in mind is that it is not necessary for all the co-applicants to be co-owners. They can be members of the same family also.
- Tenure of the loan can be spread up to the period of 15 years.
- The tenure of the plot loan depends on various factors such as customer’s profile, age, repayment scheme, the age of property at maturity etc.
- There are various types of plot loans provided by HDFC bank and those include
Fixed home loan
Documents required for getting the loan approval includes:
- Valid passport
- Aadhaar card
- Voter ID card
- Driving license
Last 3 months’ salary receipts, latest IT return, last 6 months Bank’s statement showing all debit and credit for proof of income.
Other documents such as passport size photograph, employment contract, contribution proof and a cheque for processing fees.
SBI Land Loan
- Under personal financing for plot loans, SBI offers up to RS 10Crores.
- SBI has flexible repayment tenure by which customers can avail up to 15 years. But for agricultural plot loans, the repayment period goes up to 9 to 10 years.
- Loan extension is also available for customers who have obtained a plot loan can further take a loan for various improvement purposes.
DHFL Land Loan
- The tenure of the loan ranges from 1 to 20 years. Beyond the retirement age of 60 years, the term doesn’t extend.
- Getting a loan with a tenure of 20 years helps you to reduce EMI amount on your loan.
- The interest rate is flexible which fluctuates from time to time based on market conditions.
- You have easy repayment options.
- A Loan can be applied for an individual or group jointly. Further enhancement of the loan amount is possible by including an earning co-applicant. Co-applicant can be members of the same family also.
Who can take a loan?
- Landless agricultural workers are eligible for SBI plot loans.
- Marginal and small farmers.
- Customer’s having a good record of repayment of the loan within 2 years.
- Various borrowers who have good repayment record in other banks too.
- Applicant’s residing in India.
- The applicant having a stable income and job.
- For identity proof various documents such as valid passport, Aadhaar card, driving license and voter ID card.
- For income proof, various documents such as PAN card, salary receipts, IT return and bank statement.
- Property related documents like agreement, deed, a copy of allotment letter and title deeds.
- Other documents like passport size photo, employer’s document, and contribution proof.