Indian investors are usually inclined towards buying land either purely as a good investment and for building a property. Therefore, you may not be eligible for a home loan, but for a land loan if you are looking to buy a plot. Mortgage loans can be found just for the house currently built, under construction or expected to go through construction soon. For funding the acquisition of the plot that is vacant you are going to need to go for a land loan rather. Even though terms, prices and operations pertaining to land loans are much like compared to a mortgage, there are lots of intrinsic differences when considering the 2 as outlined below:
Property venue and Type: Unlike mortgage loans that are available on all properties aside from their location or kind, you might get a land loan limited to a plot that is residential. Additionally, “the home must certanly be positioned within municipal or firm limitations. Consequently, you can not get financing for purchasing a land that is agricultural or even for purchasing an item of land in a town. You could go with a true mortgage, for constructing your home for the reason that bit of land, following the purchase, ” claims Adhil Shetty, founder & CEO of BankBazaar.
Lower LTV: Loan To Value (or LTV) could be the quantum of loan you could get against a residential property. Although you can avail as much as 80-85% financing in a mortgage (90% in some cases), for the land loan, the utmost LTV is stipulated at 70% regarding the plot value at most readily useful. This efficiently implies that if you should be considering investing in a plot for either individual usage or as a good investment, you will have to shell down a minimum of 30% associated with funds from your pocket. Continue reading