Similarities Between a Home Loan & a Land Loan

Taking a home loan is a common phenomenon these days, but not everyone is comfortable with living in an already built house, especially in high-rise apartments. The essence of owning land is more attractive when compared to owning an apartment. This is where land loans come in. However, there are some inherent similarities between a home loan and a land loan, but before getting into that, let us understand more about a land loan.

A land loan is given for specific locations as well as for a certain type of plots. First and foremost, the plot needs to be used for the construction of a house and not for any other purpose. Furthermore, the plot needs to be inside the jurisdiction of the municipal body.

The land loan is similar to a home loan to the extent of its application procedure. Most of the process, which is taken to approve a home loan is also followed during the approval of a land loan. This includes validating the agreement and the property details, as mentioned in the deed. Even the EMIs options and its tenure, in some cases, are similar for both the loans.

When it comes to eligibility criteria, the eligibility for a land loan is similar to most other loans.

1. The credit score of the applicant to verify its creditworthiness
2. Monthly income, as well as the age of the applicant, indicates if she/he would be able to pay the loan in time
3. Job stability is factored to see if the applicant is financially stable in terms of income.
4. The information on existing loans would indicate if the applicant is able an additional liability

As the land loan is not a home, it does not get the tax benefits under Section 80 and 24 of the Income Tax Act, which is available for home loans. However, you can avail these tax benefits once you plan for the construction of a house in the same plot in the near future.So, if you are planning to own land, contact a financial institution of your choice to make further enquiries.

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.