Not all people have the same tastes in homes. While some prefer a ready-made property, others favour building a house on a piece of land they own. But, whichever option you fancy, you can’t deny that both fall into the category of big-ticket purchases.
Fortunately, many Indian lenders provide easy loans for both residential property and plot purchase. If you’re someone who’s wondering what the difference between plot and home loan is, keep reading.
Plot vs home loan
Here’s a detailed comparison of plot loan vs home loan:
|Point of Comparison||Home Loans||Plot Loans|
|Purpose||You can use a house loan to buy any ready-to-move-in or under-construction property like apartments, flats, villas, bungalows, or row houses.||Plot loans can only be used to buy a piece of land earmarked for residential property construction.|
|Loan-to-value ratio (LTV)||The LTV on housing loans can go up to 90% of the property cost. However, it may vary from lender to lender.||The LTV on plot loans can be anywhere between 70% and 80%.|
|Tax Benefits||Housing loan borrowers can avail of tax benefits on both the principal amount and interests paid under section 80C and 24 of the Income Tax Act.||Plot loan borrowers can only avail of tax benefits for a loan taken for house construction. Also, the tax benefits can only be claimed after the house is ready.|
|Interest rates||Home loan interest rates are relatively lower than interest rates offered on plot loans.||Between the two, plot loans usually have a higher interest rate attached to them.|
|Tenure||The tenure for home loanscan go up to 30 years.||The term for plot loans can go up to 15 years.|
|Location||You can use a housing loan to purchase a property in any location of your choice.||The plot you’re looking to buy must be within the limits of the corporation or municipality. Also, the land must not be located in a rural or industrial area. Agricultural land is also off-limits.|
Additional Read: Loan for Buying Plot? Here’s All You Need to Know!
Similarities between plot loan and housing loan
Both loans have similar eligibility criteria and application processes, although this can change from lender to lender. Your CIBIL score also plays an integral part in your application process, whether it’s a housing loan or plot loan.
Understanding the plot loan vs home loan benefits can help you decide which type of home will be better suited to your housing needs.
Additional Read: Plot vs Flat – Which One Is the Better Investment Option?
Over to you
Ready to take a housing loan to realise your home owning dream? Let Tata Capital finance your home! With our attractive interest rates, flexible payment options, and easy eligibility, we will be the perfect sidekick for you on your home buying journey.
Calculate your home loan EMIs today with our calculator.