If you take a loan for buying a plot of land, you need to construct a house within few years Getting a loan for buying a plot you have been eyeing in your hometown or a place nearby is possible, but there are certain conditions you need to fulfil if you take such a loan.
Some Key points
* Any individual aged 21 years or above having regular income is generally eligible to apply for land Purchase loan.
* You need to construct a house on the plot of land for which loan has been taken within a stipulated time period, which is generally in the range of 2 or 3 years.
* The minimum constructed area needs to be at least 25% of the total plot of land. You will have to construct at least 25% within the time frame of 2/3 years even if you have acquired the plot of land through a plotting scheme of development authority. Without the loan, the authority gives around 15/20 years to construct the house.
* If you aren't able to construct a house within the given time frame, banks/housing finance companies generally charge a penal interest of 2 or 3% over and above the contracted housing loan rates.
* Banks/housing finance companies may revise the loan re-payment period downward, which may increase the burden of EMIs (Equated Monthly Instalments) on you.
* If you fail to repay the reworked EMIs, the bank can forfeit the plot of land for which you took the loan.
* Generaly, the development authority will reclaim the plot only after 15/20 years, the time allotted for construction without a loan.
* The maximum amount you can avail for buying a plot of land depends on your income as well as on the value of the land. Banks/housing finance companies provide loans ranging between 60-75% of the value of the plot of land. So, if the value of the property is Rs.20 lakh, you can avail maximum loan of Rs. 15 lakh and have to contribute the balance from your own sources.
* The tenor of such loans is around 8/10 years and the rate of interest charged about 1-2% above home loan rates, which varies between banks/housing finance companies
* Any one can take another housing loan for constructing a house on the same plot of land. In such cases, both the loans would run concurrently. But remember that having one loan already, your repaying capacity would come down and, therefore, the loan you get for constructing a house may be limited.
* There is no income-tax benefit on a loan taken for a plot of land. But, at a same time plot and home loans taken jointly, income tax benefit is available.
* Like IDBI, HDFC also gives plot of land loans for future investment purpose.
* A nominal processing fee of 0.5-1% of amount of loan taken is generally charged by banks.
* List of Some of Banks Providing Land Purchase Loans:
State Bank of India,
HDFC Bank,
ICICI Bank,
Bank of India,
Standard Chartered,
IDBI Bank,
Union Bank of India,
UCO Bank,
Bank of Baroda and
Citibank.
Some Key points
* Any individual aged 21 years or above having regular income is generally eligible to apply for land Purchase loan.
* You need to construct a house on the plot of land for which loan has been taken within a stipulated time period, which is generally in the range of 2 or 3 years.
* The minimum constructed area needs to be at least 25% of the total plot of land. You will have to construct at least 25% within the time frame of 2/3 years even if you have acquired the plot of land through a plotting scheme of development authority. Without the loan, the authority gives around 15/20 years to construct the house.
* If you aren't able to construct a house within the given time frame, banks/housing finance companies generally charge a penal interest of 2 or 3% over and above the contracted housing loan rates.
* Banks/housing finance companies may revise the loan re-payment period downward, which may increase the burden of EMIs (Equated Monthly Instalments) on you.
* If you fail to repay the reworked EMIs, the bank can forfeit the plot of land for which you took the loan.
* Generaly, the development authority will reclaim the plot only after 15/20 years, the time allotted for construction without a loan.
* The maximum amount you can avail for buying a plot of land depends on your income as well as on the value of the land. Banks/housing finance companies provide loans ranging between 60-75% of the value of the plot of land. So, if the value of the property is Rs.20 lakh, you can avail maximum loan of Rs. 15 lakh and have to contribute the balance from your own sources.
* The tenor of such loans is around 8/10 years and the rate of interest charged about 1-2% above home loan rates, which varies between banks/housing finance companies
* Any one can take another housing loan for constructing a house on the same plot of land. In such cases, both the loans would run concurrently. But remember that having one loan already, your repaying capacity would come down and, therefore, the loan you get for constructing a house may be limited.
* There is no income-tax benefit on a loan taken for a plot of land. But, at a same time plot and home loans taken jointly, income tax benefit is available.
* Like IDBI, HDFC also gives plot of land loans for future investment purpose.
* A nominal processing fee of 0.5-1% of amount of loan taken is generally charged by banks.
* List of Some of Banks Providing Land Purchase Loans:
State Bank of India,
HDFC Bank,
ICICI Bank,
Bank of India,
Standard Chartered,
IDBI Bank,
Union Bank of India,
UCO Bank,
Bank of Baroda and
Citibank.
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