A Detailed Guide on Opting for a Land Loan in India

5 mins read

Do you work and live in an urban Centre and are tired of renting? How about owning your home instead of renting? You could be spending more on rent, which you can use to buy a plot and build a home.

Let’s say you are ready to move into your house but can’t get a posh home to buy. If that’s the case, you can get a loan to buy land and build a house that suits your class.

Buying plots and selling at a profit also is a lucrative business. But getting enough cash to purchase a plot from your salary might prove hard.

However, you can avail of a land loan at affordable interest and buy plots for resale. Many financial institutions will give you money to buy a plot at your preferred location.

Read on to understand what you should check to get a loan to buy land. In this article, we have listed all factors and details related to the plot loan. Know all the details and apply for a plot loan.

Essential Factors to Guide You when Taking a Plot Loan –

Check Eligibility Criteria for a Land Loan

Lending conditions vary from one financial institution to another. Are you a resident of India? If yes, you qualify for a plot loan. 

In addition, you qualify for a PNB housing land loan if you’re aged 21 years or older and will not be older than 70 years when your loan matures.

You should also have a CIBIL score of 750+ for your land loan approval. 

However, remember that your loan won’t be approved if you want to buy a piece of land in the village. A land loan is meant to purchase a residential plot in an urban area.

Go for The Lowest Land Loan Interest Rates

Interest rates determine how much cost you pay for a loan to buy land. You pay more if you get a plot loan at higher interest rates.

Lenders charge different rates for a loan to purchase a plot. Go online and research a lending institution with the cheapest land loan interest rates to reduce the cost of borrowing.

Keep Ready the Documents Required for Land Loan Approval

Do you have the right documents to ease loan processing? Your plot loan may be declined or delayed when you don’t have the required documents.

Ensure you get and dully fill out the loan application form. Documents proving your age, residence, income, and title deed of the land you want to buy should be ready.

Consider Additional Charges to a Land Loan

Extra charges on top of interest rates increase the cost of your loan. When borrowing money to buy land, you need to check the additional charges and interest rates.

Choose a lender with minimal or no additional borrowing charges. For instance, PNB housing won’t charge you for making prepayments.

However, note that no matter where you apply, there will be a charge if you delay paying the EMIs; you might incur up to 24% per annum for the delayed period. In addition, the loan processing fee is small, at 1% of your plot loan.

Keep Your Credit Score High

You get good loan deals when your credit score is good. If your CIBIL score is 750+, you will get a huge land loan amount and lower interest rates at PNB housing.

If your score is low, don’t be in a hurry to sign up for a loan. Work and raise your score first. Pay your outstanding loans timely and apply for credit score error corrections if you have any.

Choose the Shortest Loan Tenure

Can you manage to pay bigger EMIs? If yes, consider getting a loan with the shortest tenure. That way, you reduce the payable interest, which reduces the loan cost.

Many lenders offer plot loans with a 10 to 15 years repayment period. Choosing a loan with maximum repayment lowers repayment pressure since you pay small EMIs. But note that the cost of your loan is higher for long-tenure loans.

Conclusion

With the points mentioned above, getting a plot loan becomes easier. Follow the guide and choose today and own a plot at the most strategic location you want to live!

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