Differenc Between Land Loan and Home Loan
With the rising real estate prices in India, a Home Loan is the only way through which most people fulfil their dream of buying a home. To better meet the needs of the borrowers, lenders in India now offer different types of Home Loans.
If you are looking to construct a home of your own, you will first have to purchase land for the same. Now, there are loans available to help you purchase estate where you can build the home of your dreams. Check out this post to know what is a land loan and whether it is the same as a Home Loan.
Not every individual or family is comfortable living in a flat of a high-rise residential building. They prefer purchasing land and constructing a home of their own as per their own specifications. But with the land prices consistently rising in India, most people are unable to achieve their dream of constructing their own home.
Fortunately, there are now some lenders in India who have started offering a Land Loan which can be used for purchasing land of your choice. Some important points about a land loan are as follows:
1. What is Land Loan?
You can take a land loan for purchasing a non-agricultural piece of land or plot where you can construct your own home. However, it is necessary for the land to be within the hub locations limit of the municipality. But if the land outside the municipal limits is directly allotted by the Development Authority, it can be eligible for the loan.
Lenders generally offer 75%-80% of the value of the land as a loan, and the rest is to be paid by the applicant as the down payment. Once the loan is taken for purchasing land, a borrower is required to provide declaration that the home will be constructed within 2 years from the date of funding.
2. Is Land Loan Similar to Home Loan?
The terms Land Loan and Home Loan are often used interchangeably, but they are not the same. Right from Home Loan interest rates to the purpose of the loan, everything is different when compared to a Land Loan. A Home Loan is taken to purchase a constructed or under-constructed residential property.
On the other hand, the Land Loan is only for purchasing land. You cannot take a Land Loan if you want to purchase a residential property and you cannot take a Home Loan for buying a land.
3. Are Composite Loans and Land Loans same?
No, they are different. Composite Loan combines the land purchase with construction. In other words, you can take a Composite Loan for purchasing land as well as building your house on it.
But a Land Loan cannot be used for home construction. It can only be taken to purchase land. You can either pay for the construction yourself or take another loan like a Home Loan, which is also available for home construction.
4. What are the eligibility requirements for Land Loan?
The eligibility for a Land Loan is mostly similar to Home Loan eligibility. Some of the most common factors that the lender will look into are:
- Credit score
- Age of the applicant
- Monthly income
- Job stability
- Work experience
- Existing loans
5. Are there tax benefits available for Land Loan?
There are many different types of Home Loan benefit in tax as well under Section 80C, Section 80EE, Section 24 and more. However standalone Land Loan does not qualify for tax benefits.
Construct your dream home with Land Loan
A land loan is an excellent option if you want to purchase land and construct a home of your own. You can now also find land loan calculator online to know the exact EMI amount and apply for the loan with confidence.
Look for a trusted loan provider for the loan and check the eligibility requirements carefully to ensure that the application and approval process is quick.
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