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Personal Finance - How to avail a Land Loan
01-Apr-2015
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Mostly, all banks and non-banking financial companies (NBFC) offer land loans to Indian residents, who have attained 21 years of age.

All of us are already accustomed to the process of Home Loan, but what if a person has selected a land and wants to build a home on it by taking a loan. Such loan is categorized as ’land loan.’ Mostly, all banks and non-banking financial companies (NBFC) offer land loans to Indian residents, who have attained 21 years of age. Both salaried and self-employed individuals, with a robust repayment history can avail land loan.
 
Within municipality limits: Banks and NBFCs will extend land loans for land only under municipal or corporation limits. If the land comes under agricultural or commercial vicinity, then a loan cannot be availed on such land.
 
Non-Resident Indians: While Indian Residents are eligible to get a land loan for both constructing a house or as an investment, Non-Indian Residents can apply for the loan only if they wish to construct a house.
 
Loan limit: Land loan can be taken for up to 70% cost of the plot in urban areas. While the percent drops down to 50-60% for land in smaller cities or towns. Hence, the remaining 30-40% of down payment has to be paid by the loan borrower only.
 
Tax eligibility: Though a land loan is part of home loan offering, but a landowner would not get any tax benefit for just owning the land and keeping it as investment. The tax benefit comes in picture only if landowner decides to build a home on the said land. But, still tax deduction will start from the year when home construction is complete.
 
Other requirements: Land loan process is similar to a home loan procedure. A person has to submit his identity proof, address proof, income record, as well as all the other land related documents. The land in question should bear clear title and possession certificate, encumbrance certificate, location certificate along with back documents of last 15 years needs to be produced.

Source : India Infoline back