Investing your money in real estate is a milestone in your life and believe it or not, it is bound to change your life right from the next instant. It doesn’t matter whether you are a first-time investor or not, it’s extremely important to know about loans and how they ease the entire buying process for you. Buying a home or a plot of land may not seem different to most and both are usually considered as a home loan but it’s important to consider the differences while applying for the loan. Although the terms and conditions, the application processes, and the tenure of both the loans are quite similar, there are some fundamental differences between home loans and land loans. The most important factor when it comes to home loans is eligibility. Let’s check out the difference between home loans and land loans.
Home Loans
Home loans are availed to the eligible people for the purchase of residential properties that are to be constructed in the future, or for under construction, or for ready-to-move-in properties.
- You can get a home loan to any type of residential property in any location of your preference
- Any resident of India and NRI’s are eligible for home loans
- The maximum tenure of the home loan can be 30 years
- If both the husband and wife have separate sources of income are co-owners of the property, both can claim an income tax deduction on the loan separately
- Tax deductions can be availed for both the principal and interest payments
- The loan-to-value (LTV) ratio is between 75% and 90% of the total cost of the property, depending on the lenders
- Interest rates are at an all-time low ranging between 6.65%-8.00% depending on the lenders
Land Loans
A land loan can only be used to buy a plot of land that has been earmarked for residential real estate construction.
- The location for the plot should be within the limits of the municipality or the corporation or in industrial or rural areas
- Only residents of India are eligible for land loans
- Land loans cannot be used for the purchase of agricultural land
- The maximum tenure of the land loan is 15 years
- No tax deduction for the purchase of the property, the tax deduction is only eligible for construction of the property on the plot and can only be claimed after the completion of the construction
- The loan-to-value (LTV) ratio is up to 75% which means that 70%-75% of the total value of the property will be provided as a loan
- You can avail of a plot loan to purchase a plot through direct allotment or to buy a resale plot, depending on the respective lender
- The interest rates are about 0.75%-1% higher than the home loans
At TMR Group, we aim to bring promising ROIs in the shape of RERA and HMDA approved plots in Hyderabad. Our projects have precisely designed layouts in the most sought-after locations of Hyderabad that have a great potential to multiply your investments in the upcoming future. Check out www.tmrinfra.com to know more about us and our work. Get in touch with us!