George Fernandez never wanted to move in a ‘ready-to-move’ home developed by a builder even though he had the required eligibility and money for down payment. One of the major reasons for that was his dream to build a home as per his own likings. He wanted to build a home with a garden in front and a garage in the backyard.
After visiting many properties and as they failed to live up to his expectations, he decided to opt for a plot loan and start building his dream home for his family.
If you are also willing to avail a loan for plot purchase at lower interest rates to construct your own home, you need to consider some vital points while applying for it.
Considering these points will help you get the land loan quickly and without hassles.
- Type of Plot or Land
You should be aware that there are numerous types of land or plots envisioned for a distinct purpose. These may include industrial plot, residential plot, agricultural plot, and a lot more. You are free to avail a standard Home Loan for all types of properties. However, a land loan is only available for residential plots. Thus, before applying for a loan for plot, ensure that it is a residential land.
- Physical Limitation
Some people intend to buy a plot in the outskirts or many kilometers away from the city limits to enjoy a lower rate. However, you need to consider a valid point if you have plans to avail a plot loan to fund a plot of out of the city limits. Yes, a plot out of municipal limits or villages won’t be covered in it.
- Loan Tenor
The maximum tenor allotted for a plot loan may be lesser than that of a regular Home Loan from leading banks and non-banking finance companies (NBFCs). While a standard Home Loan can give you a tenor as wide as 20 years, a plot loan may give 15 years or more. It is vital to consider this point as spreading the plot loan in an extended tenor helps you repay it with lower EMIs and manage other things smoothly .You will need to consult your lender to know an exact tenor.
- Plot Loan Interest Rates
Plot loan interest rates may be a bit higher as compared to a Home Loan. Since a plot loan is linked in many fiscal factors, the chances of it being negotiated is also bleak. If you are getting a choice of fixed and floating rate of interest, going for fixed will help you pay fixed EMIs. It is because floating rates are influenced by market conditions which means the loan EMIs can go up and down and affect your monthly outgoes.
- Your Purpose of Purchasing the Plot Matters
Are you purchasing a plot just for an investment purpose so that you liquidate it and sell it at a higher price? Are you buying a plot for building a home on it? These points can play a role in the pricing of the loan. Yes, lenders give priority to such candidates whose purpose of a plot purchase with the help of a plot loan is to build a home on it. The construction of a plot gives lenders a sense of security, and as a result, they can let you enjoy lower plot loan interest rates.
The Bottom Line
A plot loan will be easy to apply as you are aware of the vital considerations to make while applying for it. If you think you have analyzed all these factors in sync with your needs, and repayment capacity, you can apply for a plot loan online. Happy plot loan application!