It doesn’t matter if you’re an experienced homebuyer or a first-time one, a home loan is something that you should be well aware of before making a huge purchase.
Many choose to buy a fully constructed apartment or house, while others prefer to buy a plot of land, either as an investment or to construct their own house and design it. This is the time when you decide if you want a land loan or a home loan. What is the difference between them and what are their benefits?
Difference between a home loan and a land loan
The major difference between them is that the home loan can be used only to buy a residential property that is fully constructed or under construction. Whereas, a land loan which is also known as a plot loan can be used only to buy land that has been marked for the construction of a residential property.
Features of a land loan
- The land/ plot should be within the limits of the corporation or the municipality.
- One can’t buy agricultural land with the help of that loan.
- The plot should not be located in a village area or an industrial area.
- The loan tenure can be up to 15 years.
- A tax deduction is applicable only for the loan that is taken for the construction of the real estate and can be claimed once the construction is done.
- The LTV (Loan To Value) that one may get is up to 80%.
- You can take a plot directly through allotment or buy a plot that is for resale, depending on your lender
Features of a home loan
- You can avail of a home loan to buy real estate at any location.
- The tenure of your home loan can go up to 30 years.
- One can avail of tax deductions.
- Depending on the lender, the LTV (Loan To Value) is up to 90% of the cost of the real estate.
- If one has a joint home loan and the husband and wife have different sources of income, then both of them can claim a tax deduction on the loan separately.
- One can use their home loan to buy a row house, bungalow, or an apartment depending on their builder.
- One can also use their home loan to buy properties from existing cooperative housing apartments, private homes, or homes built by government developmental authorities.
Understanding the benefits and features of both a land loan and a home loan can help you choose which one suits you and your requirements the best, whether it is a land that will be constructed into a house later on or a read-to-move-in house.
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.