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Plot Loans

Loan to buy plots or sites is different from loan given to buy apartment or independent houses

Loan to buy a site/plot comes with a restricted tenure of 10 to 15 years thereby impacting your financial eligibility

The funding is also restricted to 75% to 70% of the property value compared to 80% in case of apartments and ready built houses

You do not get tax benefits for exclusive site loans. The interest subsidy benefit under Pradhan Mantri Awaaz Yojna is also not applicable for site purchase

The ROI charged will also be a tad bit higher as they are classified under realty loans and not under home loans. Once you start the construction the ROI will be converted to that of Home Loan

The concept of composite loan for all technical purpose does not exist anymore. You are initially given a site loan and once you have the sanction plan to construct you are given the construction loan. The site loan outstanding balance will be moved into the new construction loan and all benefits of income tax, both principal & interest will now be applicable. Even the interest rates applicable will be as per the home loan rates

Plot loan comes with a pre condition asking you to start the construction within a certain time period, let’s say 15 months to 5 years depending upon the bank. If you fail to start the construction within this timeframe they will levy interest rates applicable for loan against property or commercial interest again depending upon which bank you engage with