Investing in land is considered a good choice as the value of land is always increasing. A lot of people invest in plots and wait for its value to increase over time- after a few years, they either sell the plot or build a home of their own on it. The initial investment of buying the plot can be quite overwhelming for many and this leads them to opt for a Land Purchase Loan.
A land purchase loan can be availed to finance the purchase of a plot. However, before availing this loan, prospective applicants need to take care of a few things- what are those things, you can find out here:
As plot loans are only meant for the purchase of residential plots, the applicant should make sure that the plot he/she is intending to buy is not an industrial or agricultural plot.
In case of these loans, purchase of plots on the border of the city or town may not be possible as the local municipal authority needs to have power over it.
The repayment tenure of land purchase loans are generally lower than that of home loans.
Purpose of purchase
Lenders assess why the plot is being bought- whether it is for future resale, for construction of a home or a commercial complex. Building a home adds credibility to the purpose and can help in getting a lower rate of interest.
Lenders always assess the risk for them before granting approval on a land purchase loan. The key aspects here are purpose of buying the plot, credit profile of the applicant and the construction timeline.