When we start dreaming about buying a home or a plot to construct a house a question arises that either we should go for a home loan or a plot loan and what is the basic difference between these two? So, here I am going to share some important point that you should consider before going to process your loan. This will make your process easier.
Type of Loan
The major difference in both types of loans is that a home loan you can avail to buy a completely constructed or under construction residential property and in another case a plot loan you can get against a residential plot you are going to buy to construct a residential property. A plot loan covers not a limitation that in this period you should construct a property the only condition to avail this loan is the plot should lie under the residential area declared by the government. You can customize your own tenure and other conditions while processing these loans.
Type of Property
Type of property totally depends on the loan type. You can opt-out from a residential property, flats provided by builders or any kind of government-approved housing plans to avail a home loan. In the case of plot loan, you can avail this facility against the plot that comes under the residential area of the city but not in the village. In both the conditions you can’t be able to get a loan against any industrial or agricultural land, property or area.
LTV or Loan to Value
LTV or simply we can say Loan to Value is the final amount you will get after the successful process completion of a home loan and this should be taken against a residential property. You may get LTV as his as 90% of the value of the property for the loans under 30 lacs but in case of plot loans, it is restricted to 70% of the property value.
Benefits in Taxes
In terms of tax benefits, there is only one possibility. If you are taking a home loan against a completely constructed house or residential property then you will get some benefits in taxes and if you are going to take plot loan you will not get any benefit in taxes. Although you may get some benefit in taxes if you show that you are taking a plot loan to construct a property on that.
Tenure
Tenure of the loan purely depends on the conditions that decided by the lender. But in general, in case of home loan, you can opt for a tenure of maximum 30 years but in case of plot loan, you can opt for a maximum tenure of 15 years. Tenure plays a vital role in the EMI process so choose wisely while taking a loan.