Reason to Consider Recreational & Vacant Land Loan for your Plot

As the number of people applying for loans is increasing these days, so does the type of loan that they select for investing in a particular property. Many people consider buying land instead of a residential home, with an objective of growing investment or for building a home from scratch.In such a situation, the traditional mortgage loan cannot be availed. You need to apply for home site loans, recreational or vacant land loans. Let us get to know more about such loan types and mortgage loan against vacant land loans.

• As compared to home loans, the land loan has a shorter tenure
• A shorter tenure means higher EMIs
• Land loans are driven by a stipulated time phase for construction. This means once the loan amount is approved, the bank requires you to begin construction on the plot within a specified time period.
• Most banks imply prepayment charges on land loan
• Interest rates are either floating or fixed
• Land loan do not fetch any tax benefits
• If you are taking a land loan, you are required to bear 30% of the total cost of land

To build a home of your dreams, you can avail home site loan from any bank or financial institution. You can choose loan tenure as per your convenience; however, the maximum tenure is 15 years. You can either apply individually or propose a joint application for the home site loan. Having a co-applicant will help to maximize your loan amount, and you would get a better interest rate.

Not all customers buy land to build a new home, few of them purchase vacant land to turn it into a recreational land for fishing, hunting, horseback riding or other outdoor activities. For this purpose, banks offer recreational land loans at a variable or fixed interest rate.

Just like a recreational land loan, the vacant plot has an area anywhere greater than 10 acres. Typically, the bank requires you to pay 20% of the total cost of the land.Any Indian resident aged above 21 years of age can apply for a land loan. Since NRIs are the prominent buyers of land in India, banks do not extend plot loans to this section of the population.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.