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What you should know about land loans a quick & easy guide! (1)
What you should know about Land Loans: A quick &
Are you contemplating on the idea of buying a plot in Bangalore? Whether it's for
investment purpose or building your home, owning a block of land secures your future.
With the options to easily avail loans from banks and financial institutions, you shouldn't
keep postponing the thought of buying a land. Because the real estate prices in Bangalore
are shooting up. And if you delay, you might end up buying the same land for a higher cost
a year or two later.
In this post, we will help you understand everything about plot loans. So you can make an
informed decision while applying for a plot loan.
What is land loan?
Land Loans are mostly referred to as Home Loans. However, both are entirely different.
Simply put, land loans or plot loans are offered to buy a piece of non-agricultural land for
residential/commercial purposes. The block of land you are buying would come under the
limits of municipal/local government bodies.
Basically, when you are applying for a land loan, you have two options to choose from.
One is Composite loan, and the other is Land Loan.
Know the difference between Composite Loans & Land
Composite Loans are land loans that come with a clause, warranting you to construct a
building within a particular period. Usually, the time frame is two years, but there are
financial institutions that even offer five-year stipulation time to start the construction.
Composite loans would actually cover the construction costs, as well.
On the other hand, Land Loans just cover the cost of the plot you are buying. Unlike
composite loans, this will give you the option to apply for a construction loan in the future.
Eligibility criteria for Land loans:
Your repayment capacity is the foremost concern for banks and financial institutions to
offer loans. Hence, you would be considered eligible only if you meet the following criteria:
For Salaried Individuals:
• Minimum salary must be INR 20,000/-
• However, if your salary is less than INR 20,000, and if you have an additional
income, banks might consider.
• Your CIBIL score(Minimum 750 points) should be good, and it would be checked for
the latest seven years
• The maximum EMI that you can pay is 50% of your monthly salary amount
For Self-employed Individuals:
• Minimum annual income must be 3-4 Lakhs rupees
• The maximum EMI that you can pay is 50% of your average monthly income.
Mandatory Documents for Land Loans:
While applying for land lands, producing these following documents below is a must:
• Age Proof (Voter ID, Pan Card, Birth Certificate, 10th Mark Sheet)
• Income Proof of the applicant & co-applicant
• Address Proof (Aadhar card, Voter ID , Driving License, Original receipts of
Electricity Bill, Phone Bill, or Gas Bill)
• Passport photographs of the applicant & co-applicant
• Signature of the applicant & co-applicant
• Relation Proof of your spouse or father(Child Birth Certificate, Marriage certificate,
any ID proof to establish the relationship)
• 6-12 Months Bank Statement
• Qualification Proof(Not mandatory, though)
In case, if you have/had any other loans, you must submit the following documents:
• Repayment Track Record of Old Loans
• Proof of closed loans, if any
For Salaried Individuals:
• Latest three to six months' salary slip
• If you have got any increment in the last 3 months, you need to submit an increment
letter. And if you change your company, you need to submit the offer letter and relieving
• Latest 2 years' Form 16 & Form 26 AS
For Self-employed Individuals:
• Last 2 years audited financial statement copy and balance sheet .
• Partnership Deed or Memorandum of Understanding/Articles of Association
• Income Tax assessment order (ITR)
Understand your EMI
One of the commonly asked questions by our prospects at Sizzle Properties is 'How much
EMI should I pay?'
This is mainly because everyone is worried whether they could pay the monthly instalment
without making a dent in their monthly budget. And if they think the EMI is within their
budget, usually they go ahead and apply for land loans.
Now, without getting too technical, we will give you a fair idea about the EMI you need to
pay for land loans.
Roughly (Approximately), the EMI would be 1% of the loan amount.
For instance, if you take a loan for 1 lakh, your EMI would be 1000 rupees every month.
The EMI varies depending upon the loan tenure. The rates normally decrease with the
increase in tenure, but your interest rates would increase.
The best recommended to approach a reputed builder like Sizzle Properties to buy a
We hope this information would help you ease and quicken your decision-making process
while buying a plot. If you need further clarifications about loans for your property, please
drop a comment below, and we will do our best to address your queries.
And if you think this post would help anyone, please feel free to share it with them.
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