Apartments and developed societies are highly trending these days to give a dream living space to people who dream of having a new home. But still, many people prefer to follow the traditional trail by buying a plot at first and doing the construction work as per their own likings and wishes. However, buying land is a huge investment these days, with land prices rising on an upward scale over the years. With that said, only a few are able to buy land paying the amount in full, and the rest opt for a loan for land purchase.
However, availing a land loan might be easy, but there are certain things that you need to keep in mind to purchase a piece of land on loan. Here are a few things that you need to consider:
Type of land
All types of land do not stand eligible for a loan. Only land pieces that have a commercial or residential conversion can be financed. Agricultural land that falls in the category of orange and green belt cannot be financed by regular lenders. So, before you seek a loan for land purchase, make sure you are well aware of the type of land you are planning to buy.
Loan period
When you opt for housing finance, you can go to the extent of 30 years max to repay the loan amount., But the same is not the case when you seek a loan for a land purchase. The loan tenure period for such loans usually ranges between ten to twenty years based on the borrower’s profile. Hence, with the loan tenure being reduced to such a sizeable count, you can end up paying a higher EMI amount. Thus, you need to maintain quite a balance of your income-to-spending ratio to make the payments without missing the EMIs.
Processing fees
Besides the down payments and registration amount charged on the loan for land purchase, there is also a processing fee that the loan seeker has to pay for completing the loan formalities. The processing fees can either be a flat amount or can be a percentage of the total loan amount taken. But whatever the case, make sure you enquire about the same before finalizing the loan.
Geographical restrictions of the land
The lenders are very particular about the exact spot and location of the land. So getting a loan approved for land purchase greatly depends on the plot's location. Some locations of land can be fraudulent or disputed and thus can end up facing rejection from the lender company. Also, many lender companies list different authentic locations on their website. Consider checking out the same before you finalise on a piece of land.
Construction limitations
When you seek a loan for land purchase, make sure that you are taking a pure land loan that does not come with any condition that states you have to mandatorily start construction within a stipulated period of time. Don’t opt for such composite loans that come with a construction condition until and unless you have plans for building a house soon on the purchased plot. It is because if you fail to start building a house based on the agreed timeline, the lender may hike the interest rate on your loan amount. So, always check that you are applying for a pure land purchase loan.
Conclusion
These are a few things that you need to remember before taking a loan for land purchase. Knowing things in advance will help you stay geared up with all the necessary requisites and avoid possible rejections. So, before you apply for a loan for land purchase, make sure to check out these points to have a hassle-free loan transaction.
No comments yet