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Historically Indians have been purchasing lands or plot for various purposes predominantly as an investment. Keeping this in mind, banks too offer loans to purchase land for construction or commercial purposes.
A Land loan or plot loan as the name suggests is a loan provided by public and private banks to borrowers for the purchase of a plot of land.
While there are many advantages, there are also some disadvantages of that need to be taken into account by buyers, this include lack of tax benefits and lower LTV which we will get to in detail shortly.
Purpose: The loan is provided for purchase of house plots from competent authorities.
Loan Amount: The borrower can get up to 25 Lakhs or 60% value of the land value.
Margin: 40% of the value of the property
Prepayment charges: No charges are levied on prepaying the loan
Loan Tenure: The plot loan should be repaid within 5 years of tenure.
The applicants can enjoy the following benefits on the house plot loan provided by Federal bank
Speedy Approval: Once the documents are submitted and verified, the loan is approved within a few days.
Low interest rate: Attractive interest rates are provided based on the credit profile
Minimal Documentation: You can get quick approval with the required documents alone
To become eligible for a house plot loan with Federal, certain eligibility criteria need to be fulfilled. The applicant should be an Indian resident to get the loan. As repaying ability is an important factor in determining the approval, a salaried or self-employed individual with stable income.
The borrower must have the following documents to get approved for the land loan
The above- mentioned documents are indicative and additional documents will have to be submitted by the bank as required.
For any loan applicant, a credit score is an important facet that is considered by banks and other lenders when they are about to make lending decisions for any loan including your land loan. It is the onus of the applicant to maintain a good credit health especially for those who are looking to take big ticket and medium to long term loans, the presence of a poor credit score or no credit score could lead to unwanted situations such as unfavourable terms or sometimes even rejection.
To avoid loan rejection, learn more about your credit health, start with your free credit score.
The interest rate starts from 9.05%. It is subject to change at the discretion of the lender depending on the credit profile of the borrower.
Before a person applies for a Federal Bank land loan it is best to do an eligibility check which is available on the Federal Bank website and at CreditMantri.com This way your credit score will not be affected as the bank will only soft pull your credit score and compares with other internal criteria to make sure you are eligible.
The borrowers can repay the loan through the following methods
Customers can use the home loan EMI calculator to know how much EMI they will be paying each month. Customer can make use of the CreditMantri Home Loan EMI calculator and the lender Home Loan EMI calculator.
The importance of this is that customers will know how much EMI they will have to pay based on their loan requirement. This helps them to plan far ahead.
CreditMantri’ s Home Loan EMI Calculator and lender Home Loan Calculator are among the best and probably the easiest ways to compare various home loan offers and choose the loan best suited to your requirements. Using the Home Loan EMI Calculator, you get a simple and quick way to accurately compare the various loans and determine what your EMI will be with the different lenders.
This is a common query that is raised when discussing about land loans and plot loans, at first sight they do seem to meet the same purpose, but they are quite different as we shall see
Difference 1: A home loan is provided for a property that is built, under construction and or undergoing restoration and extension, while a land loan is predominantly given for purchase of a piece of land or plot
Difference 2: The Loan to Value ratio for a home loan is about 80%, for loans above 3 lakhs the LTV is 90%; while the LTV for a plot is 50-70%
Difference 3: The tax benefits which are available on a home loan are not available on the land and plot loans
Difference 4: Home loans tend to be longer up to 30 years even, while the land plot loans are extended up to 15 years
Difference 5: Another factor that is considered while taking up a land loan is the presence of 2-5% of foreclosure charges that are absent in a home loan. These are the primary differences between a home loan and a land loan.
1. How can I apply for a land loan from Federal Bank?
Federal Bank provides customers multiple ways to apply for a land loan. It can be from anywhere using the online and customer care facilities or visit the nearest branch to talk to a representative to discuss the options and then apply. Customers can choose any one of the option they are comfortable with.
2. How long will it take for Federal Bank land loan approval?
It will take at least 1 week for the bank to do their due diligence and verify all the documents.
3. What is the maximum loan amount I can get from Federal Bank Land Loans?
The maximum loan amount from Federal Bank land loans is Rs. 25 Lakhs.
Federal Bank is a private sector commercial bank which was founded in 1945. It offers investment banking, commercial banking, retail banking, private banking, mortgage, loans and credit / debit cards amongst other products. It has its headquarters in Kochi, Kerala. The bank has more than 1250 branches spread across the nation.
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