Property Loan, Land Purchase Loans in India ? Loan Shop

Property Loan, Land Purchase Loans in India

A land loan is available to customers who wish to purchase a plot of land to construct a residential house. Most HFIs who offer this loan insist that the land is purchased from a development authority or from a society. Some HFIs also permit purchase of land from a developer. However, the land has to be developed and clearly demarcated by boundaries for any HFI to accept the proposal for land finance. Loans are not available for purchase of agricultural land. Refinance of land purchased and purchase of land from an individual owner is normally not permitted by HFIs. Not all HFIs give this loan. The reasons being difficulty in documentation and security of the property(risk of encroachments).

Original documents pertaining to ownership of land.
No Encumbrance certificate for the land.
Layout / Drawing (as approved by the Town Planning Authority) of the location where the plot of land is located.
Revenue receipts and land records for the plot of land.
Tax receipts for taxes paid by the owner of the plot of land.

No Tax benefits are available as of now on land loans. However, once you convert your land loan into a Home Loan to finance the construction of your house, you can avail of all tax benefits applicable to normal Home Loans.

The general terms and conditions applicable to Land loans are as given below:
The purpose of a land loan is to finance the purchase of a plot of land from either a development authority or a society or a developer.
The maximum loan tenure offered by a HFI for the purchase of land is 10 years.
Typically, HFIs charge 1% of the loan amount as fees or some even charge a flat fee.
Most HFIs have a minimum and maximum loan amount that they lend for the purchase of a plot of land. This differs from one HFI to another and depends on the schemes offered by the same HFI.
The age norms for a customer to be eligible for a land loan are normally the same as that of a regular Home Loan.
The repayment for the loan is by way of EMIs. The mode of repayment of these EMIs could be by PDCs, standing instructions, DAS or by cash / Demand Draft.
The eligibility calculations for computing loan eligibility are similar to that of a regular Home Loan. Most HFIs also have a minimum income criterion to check out loan eligibility.
Most HFIs lay a limit on the Loan to Value ratio that they would finance for land purchase. It could vary from 70% to 85%.
Most HFIs finance the purchase of a plot of land only if it is in a location within the limits of the Concerned Municipal Corporation.
The security of the loan is an equitable mortgage of the plot of land. It is done by taking deposit of the original title deeds of the plot of land. Some HFIs also insist on additional / collateral security depending on the type of land.
The disbursement of the loan amount is always in favour of the seller of the plot of land unless you have paid the sum to buy the land. Normally, HFIs do not offer loans to plots of land purchased over a year ago.
The rate of interest on a land loan is usually lower than the rate of interest charged on regular Home Loans.
Specific terms and conditions vary from one HFI to another. Kindly use the Compare section to get HFI specific details

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Source: http://www.loanforshop.com/property-loan-land-purchase-loans-in-india/

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