With specific formalities, you may avail plot purchase loan for buying a plot to construct house as per your preferences. But one has to plan accordingly to avail plot purchase loan without much difficulty. You must be well-versed with the terms and conditions governing plot purchase loans.
Currently, you are residing in an accommodation provided by your company. But when it comes to owning a dream house, you would prefer staying in your hometown. And you want to build a house on open land as per your desires. This idea really sounds fascinating and plot purchase loans can help in numerous ways to fulfill your dream. So, let us first understand plot purchase or land purchase loans.
What are the features of plot purchase loan?
Please note the most important feature. Plot purchase loan is used for purchasing a plot only and does not include house construction cost, etc. The interest rate is higher for plot purchase loan but the tenure can be lower. You can avail fixed or floating interest rates. The construction of the house must start within the period as prescribed by the bank. If you want to prepay the loan before its completion, then you are required to pay charges for it. The due diligence process is different as compared to the standard home loans. It is advisable to buy a developed plot for approval of loan.
If you are availing plot purchase loan, keep all the arrangements ready for its construction to avoid further action by the bank. Bank may recall the loan or raise the rate of interest if the construction is not completed within timelines.
Are you eligible for plot purchase loan?
It is usual practice of the lenders to verify the creditworthiness of the applicant. The bank will check your credit report and CIBIL score as prescribed. You are required to submit valid documents such as allotment letter, agreement of sale, title deeds concerning land, and drawings of the proposed purchase. In case it is a converted property then bank will check whether any dues are present such as conversion and development charges. You must note that all these documents are mandatory. If these documents are not present, then bank will not entertain your application despite your good credentials and income records.
Do you know about due diligence required for plot purchase loans?
The due diligence is complicated as compared to that of home loan. You are required to check with the kind of ownership like single, joint or if the land is owned by family. The seller must have the right to sell. Other elements such as reservation and compliance with land usage must also be considered before buying land.
You must always look for a developed plot to be safe and secure in this transaction. The developed plots are clear with legal terms are also well-equipped with the necessary infrastructure such as water facility, drainage, electricity, etc. Banks provide loans for such plots promptly. You need to submit the title deeds and license of the builder during your loan application.
Thus, plot purchase loans are the best option for buying a plot for construction purpose. A careful selection of the land and doing your homework in advance will ease in the loan approval.
