Best banks for plot loans in India
Affordable banks for plot loans in India
A plot loan is a form of loan provided by financial organizations (sometimes known as "lenders") such as banks and Housing Finance Companies (HFC) for the purchase of a residential plot or land. A plot loan is related to a home loan, with the distinction being in how the borrowed money is used. A plot loan can only be used to purchase a residential plot of land, whereas a conventional home loan can be used to purchase a ready-made housing complex such as an apartment, bungalow, villa, row-house, and so on.
This loan must be repaid in equivalent monthly installments (EMI) over a 10-to-30-year term. It is given by the lender following a comprehensive evaluation of the applicant's ability to repay and certain technical requirements.
What Are the Advantages of Getting a Plot Loan?
The following are some of the advantages of obtaining plot loans:
Can be used to acquire residential land.
Appealing interest rates
Affordable repayment terms
There is no prepayment penalty.
The processing charge is minimal.
There is little documentation.
Sections 24 and 80C of the Income Tax Act provide a tax break.
What are the Plot Loan Eligibility Requirements?
The following are the qualifying conditions that must be met to obtain a plot loan:
A resident Indian is required.
Applicants must be salaried or self-employed.
Should be between the ages of 18 and 65.
What documents are needed to register for plot loans?
The fundamental papers that you will need to provide while applying for a land loan are listed below. The paperwork needs may vary based on the eligibility requirements established by various lending institutions.
Application form duly completed
Photograph of the applicant
Identity Documentation
Proof of residency and most recent pay stubs
Bank statement over the previous six months
Loan processing fee (Form 16 Cheque)
In addition, you may be needed to furnish the following land-related papers.
'No Encumbrance' original papers referring to land ownership The plot's certificate
The plot's layouts and drawings have been authorized by the Town Planning Authority.
Receipts of revenue
Land registrations
Tax receipts for landowner taxes paid
Lenders who provide Plot Loans
Banks, along with other non-banking institutions such as HFC, are often the primary suppliers of plot loans in India.
An HFC is a type of non-banking finance company that specializes in home loans, plot/land loans, loans against property (mortgage loans), and so on. Other banking services such as deposits, fund transfers, payroll services, and so on are not provided by an HFC.
1. Banks are institutions such as the State Bank of India (SBI), ICICI Bank, and HDFC Bank.
2. HFCs include organizations such as DHFL, Indiabulls Home Loans, LIC Housing Finance, and others.
All banks are governed by the Reserve Bank of India (RBI), whereas HFCs are governed by the National Housing Bank (NHB).
Best banks for plot loans in India
The interest rate is an important consideration when selecting a Plot/Land Loan provider since it determines the amount of EMI payable. Other significant considerations include the maximum loan amount eligible, the maximum loan tenure allowed, processing fees and other applicable costs, and so on.
Because all banks follow the Reserve Bank of India's (RBI) criteria for offering plot/land loans based on the Marginal Cost of Funds based on the Lending Rate (MCLR), interest rates are nearly the same across all banks. However, because Plot Loans have a higher interest rate (relative to other loans) and are for a longer period, even a 0.1 percent change in interest rate has a substantial influence on EMI. As a result, the total interest due over 20 years would be enormous.
The interest rates vary depending on the loan amount slab as established by each bank. In general, HFCs charge greater interest rates than banks. Based on the affordability of their plot loans for salaried and self-employed clients, they have developed a list of top lenders (in no particular order) offering plot/ land loans in India.
As of July 27, 2021, the interest rates and charges stated are accessible on the relevant bank's website.
1. State Bank of India (SBI):
The State Bank of India is India's largest bank. It is a public sector bank with over 24,000 branches in India and throughout the world.
Maximum tenure allowed: 10 years
Processing fees: 0.4% of loan amount (Min: Rs. 10,000; Max: Rs. 30,000)
Overall affordability: Moderate
2. ICICI Bank:
ICICI Bank is one of India's largest private banks. It is one of India's major banks, with over 5,000 branches across India and 17 other countries.
Maximum tenure allowed: 20 years
Processing fees: 1.0% of the loan amount (Min: NA; Max: NA)
Administrative charges: Rs. 5,000 or 0.25% of the loan amount (whichever is lower)
Overall affordability: Moderate
3. HDFC Bank:
HDFC Bank is one of India's leading commercial banks. It is India's second-largest bank and operates through a network of over 5,300 branches.
Maximum permissible tenure: 15 years
Fees for processing:
1. Professionals who are salaried or self-employed: 0.5 percent of the loan amount (Min: Rs. 3,000)
2. Non-professional self-employment: 1.5 percent of loan amount (Min: Rs. 4,500)
Overall affordability: High
4. Bank of Baroda (BoB):
Following its merger with Dena Bank and Vijaya Bank in 2019, Bank of Baroda is India's third-largest public sector bank. It is a large multi-national commercial bank with about 10,000 branches throughout the world.
Maximum permissible tenure: 30 years
Fees for processing:
1. 0.5 percent for loans up to Rs. 50 lacs; (Min: Rs. 8,500; Max: Rs. 15,000)
2. 0.25 percent for loans beyond Rs. 50 lacs (Min: Rs. 8,500; Max: Rs. 25,000)
Overall affordability: High
5. LIC Housing Finance:
LIC Housing Finance is a division of India's largest insurance firm, Life Insurance Corporation (LIC). In addition to India, the firm maintains operations in Kuwait and the United Arab Emirates (UAE), with a network of over 300 locations.
Maximum tenure allowed:
1. 15 years for plot loan
2. 30 years for the composite loan (for buying a plot and constructing a house on that plot)
Processing fees:
1. Rs. 10,000 for loan amount up to Rs. 50 lacs
2. Rs. 15,000 for loan amounts above Rs. 50 lacs
Overall affordability: High
We are certain that, with these unbeatable interest rates, you have decided to purchase a plot and build your dream house.
