Indian investors are typically inclined towards buying land either purely as a good investment and for building a residence. Therefore, if you’re thinking of buying a plot, you may not qualify for a mortgage loan, but also for a land loan. Mortgage loans can be found just for the house currently built, under construction or more likely to undergo construction quickly. For funding the purchase of a plot that is vacant you’ll have to decide on a land loan instead. Even though terms, prices and operations pertaining to land loans are much like compared to a mortgage, you can find intrinsic differences when considering the 2 as outlined below:
The distinctions between land loan and house loan
Property Location and Type: Unlike mortgage loans that are available on all properties aside from their location or kind, you can find a land loan just for a plot that is residential. Additionally, “the property must certanly be found within municipal or firm limitations. Consequently, you can’t obtain money for purchasing an agricultural land, or even for buying an item of land in a village. You could go with mortgage loan, for constructing your house for the reason that bit of land, following the purchase,” says Adhil Shetty.
Lower LTV: Loan To Value (or LTV) could be the quantum of loan you could get against home. The maximum LTV is stipulated at 70% of the plot value at best while you can avail up to 80-85% funding in a home loan (90% in some cases), for a land loan. This effortlessly implies that if you should be considering buying a plot for either personal usage or as a good investment, you would need to shell away at least of 30% associated with funds from your pocket. Continue reading