How to get a land loan in India?
Real Estate is observed as a constantly evolving segment and gradually becoming the choice of many investors. This increase in development is due to the need for more commercial and state-of-the-art residential spaces in many countries. Thus, an investment in land has become a pretty common thing.
In addition, one can gain the benefits of capital appreciation in the future. But you may wonder if buying a piece of land will cost you a fortune. But that is not true! Today, you can get land loans in less than a week with minimum documentation.
But do you know the necessary documentation and the eligibility criteria to get a loan? If not, do not worry! Here is a complete guide to help you understand everything about land loans.
What factors must be considered by you while applying for a land loan?
Land loans are influenced by various factors that you must keep in mind. So here are a couple of factors of land loans, which are as follows:
1. Average Tenure
Generally, the tenures of a home loan are larger than the tenures of land loans. The average duration ranges from 10 to 15 years, and only a few banks provide it from 20 to 30 years.
2. Pre-closure charges
In case of pre-closure of your loan, a person has to pay an extra 3 percent plus GST on their loan amount since pre-closure charges are applicable on land loans.
3. Processing fees
The processing fees usually depend upon the GST and loan amount. Usually,it varies from 1,500 to 20,000.
What are the eligibility criteria for getting a land loan?
Land loans are quite easy to get nowadays, but you might have a question that is there any eligibility criteria for getting a land loan? The answer is Yes! Some of the criteria for a land loan are as follows:
- The person who wishes to avail of the benefits of a land loan should be either self-employed or salaried.
- The borrower must have a consistent flow of income each month and should give the bank information on their existing debts, if any.
- The borrower needs to give the right information about the number of family members dependent on their income.
- The bank will also consider your good credit score before sanctioning you a land loan.
Which are the most important documents for a bank loan?
While applying for a land loan, you must have the following documents for the loan application process:
- The title deed of the land
- Requirement of a Sale deed from your architect
- Submission of the approved land layout
- Sale agreement
- Copy of the allotment letter
- Submission of the entire transaction chain along with other documents for the resale plot.
- Conversion certificate and payment receipt of development charges in case of a conversion land.
- Identity proof
- Photographs
- Address proof
- Income proof
- Fee cheque for Loan processing
- If required, then no encumbrance certificate
- Tax and Revenue receipts.
What things should a buyer keep in mind while buying land?
Purchasing land is very convenient, but one needs to keep the following things in mind:
- During the outset of the purchase, do scrutinize the land’s type. You must ensure whether the land is for industrial, residential, commercial, or agricultural use.
- There is a specific charge that needs to be paid during the conversion of agricultural land to residential, so beware whether the charges were paid or not.
- You must ensure that the land deed has no encumbrances or legal disputes.
- You need to conduct proper research on the location of the land to ensure that the land does not fall under any infrastructural project of a Government or any notified area.
An overview of the interest rate offered by various bank
The table below depicts the interest rate offered by various banks:
| Institution name | Interest rate calculated per annum | Maximum amount of the loan according to the cost of property | Tenure |
| HDFC Bank | 8.70% onwards | Upto 80% | Up to 15 years |
| DHFL | 10.25% onwards | Upto 75% | Upto 20 years |
| State Bank of India | 9.25% onwards | Upto Rs. 15 crore | Upto 10 years |
| Fedral Bank | 8.75% onwards | Upto 60% | Upto 5 years |
| Canara Bank | 9.65% | Upto 75% | Upto 10 years |
| PNB Housing | 10.10% onwards | Rs. 75 lakh and above | Upto 30 years |
Conclusion
Investing in land is undoubtedly an attractive proposition as it has many benefits. The availability of a large variety of land loans has undoubtedly given a robust to such investment. While taking up a loan, you must be vigilant and consider the things mentioned above. So, buy your land now!
FAQ
1. Can you avail any tax benefit if you avail a land loan?
Unlike home loans, loans for land purchases do not offer any benefits with taxes.
2. What is the minimum requirement for a CBIL score while applying for a land loan?
Bank requires a good credit score of 650 and above for sanctioning a land loan, or it becomes difficult to get a land loan.
3. How much time does it take to get a land loan approved from the bank?
The banks usually take at least a week for approval of your loan.
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.
