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Exactly just How is land loan distinct from house loan?

Exactly just How is land loan distinct from house loan?

Even though the terms, prices and operations linked to land loans are much like compared to a mortgage loan, you can find intrinsic differences when considering the 2.

Indian investors are typically inclined towards buying land either purely as a good investment or even for building a property. So, you may not be eligible for a home loan, but for a land loan if you are looking to buy a plot. Mortgage loans can be obtained limited to the house currently built, under construction or very likely to go through construction quickly. For funding the acquisition of a vacant plot, you will have to go after a land loan alternatively. Even though the terms, prices and operations pertaining to land loans are comparable to compared to a mortgage, there are numerous differences that are intrinsic the 2 as outlined below:

Property venue and Type: Unlike mortgage loans that are available on all properties aside from their location or kind, you can find a land loan limited to a plot that is residential. Additionally, “the home should really be positioned within municipal or business restrictions. Consequently, you can’t get money for purchasing a land that is agricultural or even for purchasing a bit of land in a town. But you can opt for mortgage, for constructing home for the reason that bit of land, following the purchase, ” claims Adhil Shetty, founder & CEO of

Lower LTV: Loan To Value (or LTV) could be the quantum of loan you could get against home. The maximum LTV is stipulated at 70% of the plot value at best while you can avail up to 80-85% funding in a home loan (90% in some cases), for a land loan. This effortlessly implies that if you should be considering investing in a plot for either individual usage or as a good investment, you would need to shell a minimum out of 30% regarding the funds from your pocket.

No Tax Benefits: Unlike a housing loan, that will be qualified to receive income tax deduction for re payment of both interest plus the major quantity, land loans try not to provide any benefit that is such.