Just paid back your home loan and are now the proud owner of your own apartment ? This is a great achievement but is it enough? You feel a sense of dissatisfaction. You paid a visit to a friend recently, who showed you a beautiful piece of residential land, he had recently purchased. You feel restless. You can’t help wondering, if you can avail a land loan to buy a residential plot of land.
You can avail a land loan either to invest (buy plots of residential land), or to construct a house. If you want to buy a vacant plot of land as an investment (buy now and sell at a higher price), you must avail a land loan and not a home loan. If you are a resident Indian, you can avail a land loan and then construct a home on the plot of land. or simply buy it as a future investment.
You can avail a land loan, only for the purchase of a residential plot of land and not an agricultural plot of land, or even land in a village. The residential plot of land should be within Municipal/Corporation limits. In case of Bangalore, you get a land loan only for A Khatha residential plot of land.
Only a maximum of 60-75 % of the cost of the residential plot of land, can be availed as a land loan. You will have to pay 30% of the cost of land, from your own pocket.
What is the tenure of your land loan?
The maximum tenure most banks offer you for a land loan, is 15 years. The average tenure of a land loan is 5-15 years. The tenure of a land loan is much lower than a home loan, which can go up to even 30 years.
You get no tax benefits, if you avail a land loan to buy a residential plot of land and leave it vacant. If you rent out the plot of land, the interest you pay on the land loan is eligible for a tax deduction.
So yes, you can avail a land loan to buy a residential plot of land. However look out to buy a developed plot of land, as this can save you from a lot of hassles.
The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.
Subscribe to our Youtube Channel
Hello friend! I am your personal financial advisor. By the end of this interactive session, I will help you to plan yours and your family's finances to ensure a better future.
This is to inform that Suvision Holdings Pvt Ltd ("IndianMoney.com") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.