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Tata Capital > Blog > Loan for Home > Loan for Buying Plot: Here’s All You Need to Know!

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Loan for Buying Plot: Here’s All You Need to Know!

Loan for Buying Plot: Here’s All You Need to Know!

Fact: Not all homebuyers have the same housing preferences. While some favour pre-built houses and apartments, others look to buy a plot and build a house aligning with their space and aesthetic needs. If you fall into the second category, you might require a considerable amount of funding to purchase a plot and realise your housing goals.

Thankfully, numerous lenders in the Indian market now offer affordable plot loans that allow you to purchase land and construct the house of your dreams.

If you’re wondering what a plot loan, read on to find out.

What is a plot loan?

As the name suggests, it is a loan for buying plot where you plan to construct a house in the future.  You can avail of these loans at affordable interest rates and repay it through easy EMIs for a tenure of your choice.

Also known as land loans, plot loans are often confused with housing loans. The main difference between a plot and a housing loan is that you can only use a plot loan to purchase a piece of land. On the other hand, a housing loan can be used to buy an under-construction or a ready-to-move-in apartment, flat, or villa. Some lenders, like Tata Capital, offer home loan that you can utilise for a variety of purposes, including plot purchase.

Also, read: Difference between a Home Loan and a Plot Loan

Eligibility criteria for plot loans

Although the eligibility criteria may vary from lender to lender, here are the conditions you must fulfil while applying for home finance with Tata Capital:

 – You must fall into the age bracket of 24-65 years.

– If you’re a salaried employee, you must have a minimum salary of Rs. 30,000, along with at least two years of work experience

– If you’re a self-employed individual, you must have been in business for a minimum of three years

– If you’re an NRI, you must be a salaried individual with at least three years of work experience

You can either visit a lender’s nearest branch or their official website to get detailed eligibility information. Several lenders also offer online eligibility calculators for quick eligibility calculation.

Also, read – Planning to Take a Plot Loan? Some Important Rules You Need to Know

Documents required to avail of a plot loan

Here’s a list of standard documents you must provide when applying for a plot loan with Tata Capital. Note that the documentation requirements may differ from one lender to another.

– Duly filled and signed loan application form

– Passport size photographs

– Residence proof

– Photo Identity proof

– Income proof, including salary statements for the past 6 months

– Bank statements for existing loan details

– Processing fee cheque, issued from the salary or business account

– Last 3 months’ salary slips

Also, read – Is buying a house a good investment for long-term value?

Plot Loan Interest Rates in India 

In India, plot loan interest rates typically range between 10% and 12% per annum, depending on the lender and your financial profile. The rate you receive is influenced by factors such as your credit score, age, income stability, employment type, Loan-to-Value (LTV) ratio, and the location of the plot.

Properties with clear titles and strong resale demand often qualify for better land loan interest in India. To secure the cheapest plot loan rates, compare lenders and check whether you’re eligible for preferential pricing based on your income and repayment history.

Also, read – All About Plot Loan Tax Benefits

How to Apply for a Plot Loan: Step-by-Step Process

Before you start the plot loan application process, you need to ensure your documents, eligibility, and property details are ready. The steps below make it simple to apply for a plot loan without delay.

1. Visit the lender’s branch or website and click on a land loan apply online to fill in basic personal and property details.

2. Upload or submit required documents, including identity proof, income proof, bank statements, and property papers.

3. Wait for verification and respond promptly if the lender requests clarifications or additional documents.

4. Once approved, sign the loan agreement and complete the disbursement formalities to receive your funds.

Plot Loan Calculator: Calculate Your EMI & Repayment

If you want to get clarity on repayment before applying, a plot loan EMI calculator helps you estimate your monthly instalments instantly.

1. Open the lender’s land loan calculator on their website.

2. Enter the loan amount you need for plot purchase.

3. Add the interest rate and the repayment tenure you prefer.

4. Review the EMI displayed for your budget planning.

Adjust values on the plot loan repayment calculator until you find the most comfortable EMI for plot loan.

Also, read – Loan for Plot Purchase and Home Construction

Tax Benefits on Plot Loans

You do not receive plot loan tax benefits at the time of land purchase itself. However, once you construct a house on the plot and start repaying the home construction loan, you may qualify for interest deduction under Section 24(b) as per tax rules for plot loan.

To claim land loan tax deduction, you must complete construction within the specified time frame and maintain all repayment records. Planning your purchase and construction together helps you enjoy optimal tax benefits on land purchase and repayment.

Plot Loan vs Home Loan: Key Differences

Before choosing between the two, it helps to understand the core differences and make a clear plot loan comparison.

FeaturePlot LoanHome Loan
PurposeFor buying land to build a house in the futureFor purchasing a ready-to-move or under-construction property
Tax BenefitsApplicable only after construction beginsAvailable immediately on principal and interest repayment
Loan-to-Value (LTV)Generally lower than home loansHigher LTV offered
DisbursementReleased in a single instalment for land purchaseReleased based on construction stages or property completion
Property RestrictionsNot allowed for agricultural land or commercial plotsAllowed across most residential projects

Repayment Options & Loan Tenure for Plot Loans

Most lenders offer flexible plot loan repayment options, allowing you to choose the EMI structure that suits your cash flow. You can opt for fixed EMIs or gradually increasing EMIs depending on your income stability.

The typical plot loan tenure ranges between 10 and 15 years, though it can vary among lenders. Shorter tenures reduce interest payout, while longer tenures make monthly instalments more affordable. If you want predictability and convenience, modern lenders also allow seamless online land loan repayment management.

Wrapping up

Are you looking to purchase a plot for your housing goals? Well, you’re in the right place! Tata Capital’s housing finance options come with attractive home loan interest rates and flexible repayment options, leaving little to be desired. Moreover, with our easy-to-meet eligibility criteria, minimal documentation requirements, and swift loan processing, you will have the required funds in no time!

Head over to our website now to check your home loan eligibility, or conveniently download our home loan app to instantly verify your eligibility.

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FAQs

How does a plot loan work?

A plot loan, or land loan, is a financial product that helps you purchase a piece of land for building a house or structure. It covers only the cost of the land and not the construction.

How long will it take for the land loan to be approved?

It usually takes at least a week for banks or lenders to process the required documents and approve the land loan.

What factors determine the eligibility for a plot loan?

Eligibility for a plot loan depends on factors like the location and size of the land, the applicant's income, job stability, credit score, and the purpose of purchasing the plot.

Are NRIs eligible for plot loans?

Non-Resident Indians (NRIs) can apply for plot loans in India, but the loan can only be used to buy residential land and not for any other purpose.

Can I use the plot loan to purchase a flat?

A plot loan is specifically for purchasing land to build a house. If you want to buy a flat, you will need to apply for a home loan.

Can I convert my plot loan into a home loan?

Yes, you can convert your plot loan into a home loan once you begin construction. You simply need to apply for conversion with your lender and share construction-related documents for approval.

What is the minimum and maximum loan amount for plot loans?

The loan amount depends on the lender and your income profile. Some lenders offer loan amounts starting from a few lakhs and going up to ₹5 crores or more for eligible applicants.

Is income from business/self-employment accepted for eligibility?

Yes, self-employed applicants can qualify for plot loans as long as they meet the lender’s income and stability criteria. You may need to provide business proof, bank statements, and tax returns for assessment.

What are the risks involved in taking plot loans?

Plot loans may involve risks such as delayed construction, unclear land titles, and location-related approvals. Choosing verified land, trusted developers, and regulated layouts helps minimise these risks.

Can I prepay or foreclose my plot loan? Are there charges?

Yes, you can prepay or foreclose your plot loan either partially or fully. Charges, if any, depend on the lender and whether your loan is on fixed or floating interest rates, so it’s best to confirm before planning foreclosure.

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