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When you want to build your own house instead of moving into an apartment, you will first have to purchase a plot if you do not have one. If buying the plot requires a huge amount of money, a land loan could be smart option to fund your need.
What Is a Land Loan?
Land loan or plot loan, as the name indicates, is a funding provided by public and private banks to purchase the land of the customer's choice. The repayment on the loan can be done Equated Monthly Instalments (EMI).
Purpose: The lender provides loans purchase of land from statutory authorities.
Loan Amount: The borrowers can get up to 75% of value of the property.
Loan Tenure: The repayment period is up to 15 years which can be repaid in EMIs.
Prepayment charges: Just like home loans, plot loans from LIC Housing Finance Limited does not have prepayment penalties.
To become eligible for a plot loan, you must be an Indian citizen. Secondly, repayment ability is an important determinant in making you eligible for the loan. Hence you should have a stable job and income. Overall, any salaried and self-employed individual with good repayment capacity will become eligible to get the plot loan.
The borrower can get the following benefits on plot loan
The interest rate is fixed at the sole discretion of the lender and it is subject to change based on the credit profile of the customers.
Most of the times land loan is confused with the home loan as the features and benefits are similar in nature. However, we have spot out some of the differences that every borrower must know before applying a land loan.
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.
The eligibility calculator lets you check how much amount you will be eligible through the calculator specially designed for it. To use the calculator, you will have to give inputs of your salary, current loans, interest rate and tenure. After submitting the details, you will get to know how much loan amount you will be able to get from LIC Housing FInance Limited.
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.
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.
The following documents will be required while applying for a plot loan with LIC Housing Finance Limited
Your land loan can be repaid in following two ways.
Standing Instruction (SI): If you are an existing account holder with lender, Standing Instruction is the best mode of repayment. Your EMI amount will be debited automatically at the end of the monthly cycle from your bank account you have with the lender.
Electronic Clearing Service (ECS): This mode can be used if you have a non-lender bank account and would like your EMIs to be debited automatically at the end of the monthly cycle from this account.
Post-Dated Cheques (PDCs): You can submit post-dated EMI cheques from a non-lender account at your nearest lender bank Loan Centre. A fresh set of PDCs will have to be submitted in a timely manner. Please note Post Dated Cheques will be collected non-ECS locations only.
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.
1. How can I apply for a land loan from LIC Housing Finance Limited?
LIC Housing Finance Limited 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 LIC Housing Finance Limited 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 LIC Housing Finance Limited Land Loans?
The maximum loan amount from LIC Housing Finance Limited land loans is 75% value of the property.
4. Are there prepayment charges on LIC Housing Finance plot loans?
No, there are no prepayment charges.
LIC Housing Finance Limited is one of the largest finance companies in India which was incorporated in 1989. Having served more than 21 Lakhs of families, the company is the pioneer in India ensuring housing finance to individuals.
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