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

NPS - How much to Invest?

  Though the deduction offered under Section 80CCD (1B) is `50,000 , it is not advisable to put the entire amount at one go. It is best to stagger your investments across several months, much like the SIP strategy in a mutual fund. However, don't make too many small contributions. There is a transaction charge of 0.25% or `20 (whichever is higher) on every contribution. If you invest `500-1,000 every month, you pay `20 per contribution, which works out to 2-4%. Invest at least `5,000-10,000 at one go. Remember, at most `2,500-5,000 of this will go into equities if you have chosen the maximum 50% allocation to stocks. The rest will flow into corporate bonds and gilt funds as per your desired allocation. 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 ...

Mirae Asset India-China Consumption Fund

Mirae Asset India-China Consumption Fund     Mirae Asset India-China Consumption Fund is the first of its kind fund that focuses on the consumption theme in Asia's two biggest economies India and China. It offers a flavor of both Indian and Chinese consumer stocks in a single portfolio $ . We are delighted to share that we have declared a dividend as below.   Scheme/Plan Quantum of Dividend (per unit) NAV of Dividend option as on March 11, 2015 (per unit) Record Date Face Value (per unit) Mirae Asset India -China Consumption Fund – Regular Plan – Dividend Option Rs. 2.00/- per unit (subject to availability of distributable surplus as on the record date) Rs. 18.302/- Wednesday, March 18, 2015 * Rs.10.00/- Mirae Asset India-China Consumption Fund is the first of its kind fund that focuses on the consumption theme in Asia's two biggest economies India and China. It offers a flavor of both Indian and Chinese consumer stocks in a single por...

Shriram Transport Finance FD

Shriram Transport Finance Co. Ltd (STFC) is self explanatory. They have decided to revise the Interest rates on "Shriram Unnati" Fixed Deposit w.e.f. 1 st April'15 . The revised interest rates applicable will be as given below:   Tenor Rate (p.a.)* 12 months 9.00% 24 months 9.50% 36 months 9.75% 48 months 9.75% 60 months 9.75%   *Senior citizens will get an additional rate of 0.50% per annum. This is only an advanced information, enabling us to inform our investors and advise them to take maximum advantage of current interest rates applicable till 31 st March,15.   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 S...

EPF or NPS - Why not both?

  In the Budget, Jaitley also empowered the corporate employees to choose between the EPF and the NPS. The details are awaited but this could be a big change in the way Indians save for retirement. However, your employer must be ready to shift to the NPS as well. Should you shift to NPS if it is allowed? Experts say you should opt for both . NPS offered by corporates now is additional to the EPF , so the same structure should continue in future also. However, much will depend on the rules and whether employers and the Labour Ministry will embrace the change.     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 inv...

Comparison of Tax Saving Funds

Comparison of Tax Saving Funds As on 11.02.2015             Scheme Name 1M  3M  6M  1Y  [%]              Rank [%]              Rank [%]              Rank [%]              Rank Reliance Tax Saver (ELSS) Fund(G) 0.99   51/59 7.52   33/57 14.34   22/55 88.54   1/54 IDBI Equity Advantage Fund-Reg(G) 2.44   30/59 10.1   17/57 25.85   1/55 85.12   2/54 Axis LT Equity Fund(G) 5.26   4/59 11.8   3/57 19.44   9/55 72.16   3/54 SBI TAX Advantage Fund-I(G) 6.28   2/59 10.28   15/57 8.08   48/55 71.13   4/54 SBI Tax advantage Fund-II(G) 4.44   6/59 6.44   43/57 9.52   42/55 68.87   5/54 ICICI Pru R.I.G.H.T Fund(G) 3.47   12/59 9.52   21/57 17.44   11/55 67.21   7/54 Birla SL Tax Relief '96(G) 3.19   17/59 ...
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