23 feb 2023 | Pillars

Differences between Home loan & Plot loan

When it comes to getting a property, You must know the features for both Home & land loans & benefits of loan there offers at the bank.

Let's see the differences between home loan & plot loan. We will start with Home loan:

Features for Home loan:

1. Location of the property:

You can get a home loan to buy property at any location of your choice. If the property is located in a city, the LTV (Loan to value) will be high since it has a higher sales value.

2. Purpose of buying

It also differs like ready-to-move-in properties, properties under construction or to be self-constructed.

3. Loan value

The borrower can usually get a loan of around 75 - 90% of the value or cost of the property depending upon the loan amount.

4. Tax Benefits

The applicants can get tax benefits on both the interest and principal payments of the home loan. It is stated from under Sections 24 and 80C of the Income Tax Act respectively for interest and principal amounts paid towards the home loan.

5. Loan period

The maximum tenure of up to 30 years can be availed for a home loan.

Features of Land loan:

1. Location of the plot

If you are going for the loan, the plot must be The plot should be located within the limits of the municipality or corporation and shouldn’t be in the industrial or village area.

2. Purpose of buying

Only for the purchase of a plot of land which will be used solely for residential purposes.

3. Loan value

The borrower can usually get a loan of around 75 - 80% of the value or cost of the property depending upon the loan amount.

4. Tax benefits

There are no tax benefits available to plot loan applicants. The only possible benefit is for the amount borrowed to build on it.

5. Loan tenure

The maximum tenure of up to 15 years can be availed for a plot loan.

These are a few features of plot & home for a buyer. Have a look at the points above again if you are the 1st time home buyer.