The possibility of getting a loan for a plot as per the market rates
Posted on: 18/Dec/2018 4:20:01 PM
Several citizens aspire the dream of buying a plot and build a dream house as per their preferred layout and features. However, most persons have doubts whether it would be possible to get a loan for buying a plot just as housing loan. The answer: Yes! It is possible to get loans for buying a plot of land!
All documents as required for a housing loan application is required in applying for a plot loan as well. The photograph of the applicant, government-issued ID card, residence proof, salary certificate (the monthly salary slip issued by the working company), and a copy of the bank savings account data of the past 6 months have all to be submitted to the applied bank.
Apart from this the document of ownership by the seller has also to be presented. Further, encumbrance certificate, Chitta certificate, the certificate of the plot has also to be submitted to the bank.
CMDA approved plot map and the receipts of property tax paid by the present owner have also to be submitted. The processing charge for scrutinising your plot loan application has also to be paid. Banks accept cheque payment.
Normally, for the housing loan, the banks process a loan up to 80% of the house cost. The applicant has to pay the balance 20% payment. The same conditions apply to the plot loan as well. The prevailing market rate for the plot will vary depending on the location – metro city, city, village, etc. The loan will be as per this. The most important feature to note is that the loan for plot will not be as per the prevailing market rate.
The loan will be as per the government guidance. For the plots in Metro/major cities, as per the government guidance, up to 70% of the plot value may be given a loan. Some banks give from 80% to 85% of the plot value. For the plots in smaller cities, the loan will be from 50% to 60% of the plot value.
Another important aspect to be noted about plot loan is that there is no Income Tax concession in this process. However, when getting a housing loan, the exemption from Income Tax is certainly given. This is not applicable to a loan application for plots where there is no Income Tax concession.
The main reason for this is that as only a plot is being bought, it is deemed as an investment. However, if construction activity for the house is taken up immediately, a part of the plot loan may be exempted from Income Tax. Once the construction gets completed, full Income Tax concession can be availed.
