Skip to main content

Land Loan different from a Home Loan

 

Ramesh, a textile trader from Panipat had to drive more than 40 kilometers everyday from his house to his office each day. The daily driving was not only burning a hole in his pocket but was also making his sluggish and unproductive at work. What if I buy a small plot of land near the office and build a second home wondered Ramesh. He approached his bank for a land loan to purchase a plot of land near his office but to his utter surprise his application was rejected as the plot came under an industrial area and outside municipal limits. Ramesh had more questions than answers after his land loan application was rejected by the bank. Here are the five questions that like Ramesh everyone willing to take up a land loan must know before applying.

So who can get land Loan?

Land loans are offered by banks and non banking financial companies to all Indian residents above the age of 21 years. Some banks also offer land loans to non residents Indians if the land is being bought to construct a house. For Indian residents, land loans are available to both salaried as well as self employed individuals with a good repayment history. The only catch when applying for a land loan is to make sure the plot of land that you are seeking to purchase is a residential plot and not an agricultural or commercial land and comes within the corporation / municipality limits. For resident Indians, land loans are available in both cases whether you are looking to construct a residential home on the plot or simply buy it as a future investment.

 

What's the maximum possible loan I can get for purchasing land?

Unlike traditional home loans where the loan is offered for under construction or fully constructed property, land loans offer a maximum loan of up to 70% of the cost of the plot in urban centers. In case of smaller cities or towns, the maximum LTV ratio for land loans is usually fixed at 50%-60% of the total cost of the plot. This means that if you are seeking to buy a plot of land through a land loan, you would have to shell out anywhere between 30 to 50% of the plot cost as down payment from your own pocket.

Will I be eligible for tax rebates for a land loan?

Even though land loan comes as part of home loan offerings of banks, you are not eligible for income tax deduction for payments made towards repayment of a home loan, taken for land purchase. However the silver lining to the dark cloud is the fact that if you start construction activity on the purchased plot, then you become eligible for a tax benefits for that part of the loan. The deduction however is applicable only in the year in which the construction activity gets completed.

What are the documents I need to submit for a land loan?

Depending on your eligibility criteria, you would need to submit your identity and address proof details to the bank. Salaried individuals need to submit their salary slip as proof of income along with photocopy of last 6 months bank statement showing salary credits. You would also need to furnish all site ownership documents in the name of your seller, to the concerned bank or NBFC. This includes no encumbrance certificate, possession certificate, location certificate and back documents of last 15 years.

 

Home Loans versus Land Loans at a Glance:

Land LoansHome Loans
EligibilityResident Indians and NRIsResident Indians an NRIs with preconditions
Interest RateBased on Base RateAs per Base Rate
Tax DeductionsNo Tax Deductions, only available for the year of ConstructionAvailable for both repayment towards home loan interest and principal amount
Tenure10-15 YearsUp to 30 Years
LTVMaximum limit of Up to 50% to 70% of plot costUp to 80%

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

Invest in Tax Saver Mutual Funds Online -

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Popular posts from this blog

National Savings Certificate

National Savings Certificate Here's everything you need to know about the 5-year savings scheme offered by the Government This is a 5-year small savings scheme of the government. From 1 July 2016, a National Savings Certificate (NSC) can be held in the electronic mode too. Physical pre-printed NSC certificates have been discontinued and replaced with Public Provident Fund-like passbooks. What's on offer The minimum amount you can invest in them is Rs100 and there is no upper limit. Under this scheme, all deposits up to Rs1.5 lakh qualify for deduction under section 80C of the Income-tax Act, 1961. The interest earned is taxable. You can invest in multiples of Rs 100. These certificates can be owned individually, jointly and also on behalf of minors. The interest rates for all small savings schemes are released on a quarterly basis. The effective rate for NSC from 1 October to 31 December is 8%. The interest is calculated on an annual compounding basis and is given along w...

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...

Different types of Mutual Funds

You may not be comfortable investing in the stock market. It might not seem like your cup of tea. But you can start by investing in Mutual Funds. Many first-time investors invest in Mutual Funds. This is because they do not know how to invest in individual securities. Basic information on Mutual Funds People invest their money in stocks, bonds, and other securities through Mutual Funds. Each Fund has different schemes with specific objectives. Professional Fund Managers look after these schemes. Your Fund Manager could help you invest in a scheme that suits your financial goal. Functioning of Mutual Funds You could make money through Mutual Funds in different ways. A single Mutual Fund could hold many different stocks, bonds, and debentures. This minimizes the risk by spreading out your investment. You could earn dividends from stocks and interest from bonds. You could also earn capital by selling securities when their price increases. Usually, you could choose to sell your share any t...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now