The plot loan is the amount of money borrowed by an individual from any bank or from any financial institution to purchase land or a plot. It is frequently confused with a home loan. As a result, it is critical to comprehend what a plot loan is and its characteristics. The borrower must pay EMIs and interest on the principal loan amount, as with all other loans. A good credit score is vital in determining the amount of your loan as purchasing plots in OMR can be highly beneficial.

Characteristics of a Plot Loan 

When applying for a plot loan for land for sale near Mogappair from any lender, you should be aware of the benefits and options of this loan facility to make a more informed decision. All of them are shown below.

  • A plot loan can be used to purchase residential land, and you can use this land not only as an investment but also to increase your future returns when reselling it.
  • If you are concerned about plot loan interest rates, you must ensure that you have a plot loan with rates as low as 7.95% per year.
  • A plot loan can be obtained for two reasons: direct purchase of plots from the real estate development authority or housing society or resale purchase of plots from lenders. 
  • For a plot loan, the LTV (loan to value) ratio will be capped at 80 percent, allowing for a loan amount of up to 80 percent of the land value.
  • The transaction fees for a plot loan at plots in OMR are also relatively low and vary depending on the lender.
  • You must understand that, unlike a home loan, where you will receive tax breaks on all paid principal and interest, there are no tax breaks with plot loans.
  • The repayment period for plot loans can last up to 20 years. You will receive lower interest rates on the parcel loan facility if you are a female borrower.

Documents Required for Plot Loans

The following is a list of documents you must have before applying for a plot loan at plots in OMR.

  • Form of application
  • Identification and proof of residency
  • salary slip
  • Form 16
  • Loan processing fee cheque
  • Land registers
  • Plot Encumbrance Certificate
  • The plot’s layout map (provided by the town planning authority)
  • Receipts for paid property taxes

Tax advantages for plot loans

When buying plots in OMR, the tax profit from plot loans will be used only if you build a house on the plot. Tax breaks are only available once the building is completed. Section 80C of the Income Tax Act allows for a credit of up to Rs. 1.50 lakh per year on the principal portion of repayment. Section 24 allows you to benefit from the interest portion of the loan after the construction of the home is completed and you begin living on the property. To use it, the plot loan must be converted into a standard home loan. 

Conclusion

So, keeping in mind these above points, you can decide your take on plot loans while purchasing from reputed property developers in chennai and can manage them better.