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Home loan vs Land loan What's the difference

 Home Loan vs Land Loan 



Most people refer to buying a new ready to move in house or a plot of land as purchasing a property. Although it may resemble a similar transaction, many don’t recognize the difference between buying a residential apartment and a plot. The most obvious point of difference between the two is when you are applying for loans. 

  

Homebuyers, today, have two options when it comes to buying a house – a ready-to-move-in/ under construction flat or a residential plot. Even though the due diligence, EMI structures, and the overall process of investing in a property may appear identical, some remarkable differences can help you make an informed decision. 

  

Purpose 

A home loan is availed for ready-to-move-in, under-construction or resale properties, and even those that will be self-constructed. On the other hand, a land or plot loan is availed for the purchase of a piece of land that will solely be used for residential purposes. A home loan cannot be availed to buy land upon which you intend to build a house. In the same way, one cannot apply for a land loan if they wish to buy a ready apartment or villa. 

  

Tenure 

Tenure and EMI structures play a significant role in any type of loan application. Home loans have a longer tenure of repayment in comparison to land loans. A home loan tenure can be as long as 30 years, whereas a land loan does not exceed 15 years in most cases. 

  

Tax Deductions 

On a housing loan, a candidate can avail tax deductions on both, the highest amount and the payment of interest. On the other hand, if one applies for a loan/plot loan, he/she can avail tax benefits only after the construction of the property on that land, and that too only on the loan amount that was taken against construction. 

  

Loan to Value (LTV) 

This relates to the amount of loan one can get against a property. The LTV ratio for home loans is roughly 75-90% i.e. the applicant can get a loan of around 75-90% of the total value of the property. Whereas for plot loans, the maximum LTV is capped at 80% depending on the loan amount. This signifies that if you wish to purchase a land loan for your personal use or investment purposes, you will have to put in at least 20% of the reserves from your pocket. 

  

Home loans and land loans are often used correspondently. It is easy to get confused between the terms and conditions of both types of loans, however, these key points would hopefully point you in the right direction depending on your requirement. If you are looking for some of the best housing opportunities across India, then you must check out the plots and apartments in Vadodara by Shree Balaji Group of developers. They are not only among the best investment opportunities but also ideal for residential use. You can now buy Premium luxury apartments or view ready-to-move-in projects with a click of a button. At Shree Balaji Group, it is not only easy to buy property in Vadodara, but also make some highly rewarding choices for future investments. 

 

We at Shree Balaji Group are accustomed to providing nothing but the best to our customers. Luxury, Location & Convenience at your doorstep. If you belong to those who have a luxury niche, the life that will suit you, you can check out the premium luxury apartments in Vadodara|Mehsana|Ahmedabad by the one and only Shree Balaji Group. 

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