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  • Budget Travel
    • Business Traveling
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    • Mountain Travel
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    • Desert Safari
    • Jungle Safari
    • Adventure Travel
  • Hotel And Resort
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    • Ski Resorts
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Lifestyle

Tips to Avail Home Loan For Purchasing a Residential Plot

by Venus W. Jones March 27, 2023
by Venus W. Jones March 27, 2023 0 comment

The dream of owning a home is a milestone that most of us strive to achieve. A way to accomplish this is to build your home from scratch. By doing so, you can customize your home per your necessities.

Moreover, investing in a residential plot of land has been an integral part of Indian households’ portfolios for a long time.

However, since the price of real estate in India is rising, getting a plot of land for residential purposes can be expensive. The ease of home loans at low-interest rates eliminates this inconvenience.

Residential Plot

If you intend to opt for a home loan for purchasing a residential plot, here are some tips:

Article Summary show
1. Assess the investment viability before obtaining a home loan for your residential plot.
2. Review the land documents.
Title Deed
Type of title
A certificate of encumbrance
Release Certificate
Occupancy Certificate
3. Maintain an excellent credit rating.
4. Debt to Income Ratio.
5. Your home loan will be easy to get if you have a co-applicant.
6. Apply for a construction loan if you plan to build on your land.

1. Assess the investment viability before obtaining a home loan for your residential plot.

When it comes to determining whether a piece of real estate is a wise buy, location is important. Look into the following before opting for a home loan:

  • Plot location and its accessibility.
  • Availability of basic amenities in the immediate vicinity.
  • Plot location surroundings and neighborhoods.
  • In the case of a developing region, the scope for further development

Analyze the plot area and determine whether construction is feasible.

2. Review the land documents.

It would help if you looked at the land records of the plot you intend to buy. And following are some things to look for when you do.

  • Title Deed

There should be a statement regarding the land’s purpose in the title deed – residential, commercial, and agricultural. There should be no ambiguous terms in the act.

  • Type of title

It would help to examine the title type, such as leasehold, freehold, or development right.

  • A certificate of encumbrance

Verify that the land does not have any pending legal cases or obligations.

  • Release Certificate

This certificate proves no outstanding loans on the land before reselling.

  • Occupancy Certificate

The seller must obtain an occupancy certificate before conveying the property to the buyer. When a buyer uses the property without securing occupancy, they will be subject to penalties under applicable laws in addition to the risk of demolition.

  • Ensure that the seller has paid property taxes by contacting the municipal authorities.
  • Enquire with the local authorities to determine whether any approvals are pending on the land.
  • Verify that the previous owners have not pledged the property as collateral.

3. Maintain an excellent credit rating.

Credit scores are a factor home loan lenders consider. A credit score indicates how well you have managed debt in the past. A list of loans you have taken, any defaults, if any, and their repayment history proof. A score that is near 900 represents good credit. A higher credit score will also help get competitive home loan interest rates.

4. Debt to Income Ratio.

Your Debt to Income Ratio measures what percentage of your income goes to pay off any EMIs (Equated Monthly Installments). Usually, this amount is in portions. An ideal piece to maintain would be up to 40%.

You can calculate your EMI using a home loan EMI calculator on your lender’s website.

5. Your home loan will be easy to get if you have a co-applicant.

You can improve your debt to income ratio with a co-applicant, and you can also qualify for a more significant loan amount.

6. Apply for a construction loan if you plan to build on your land.

With the intent to build on the land, you can apply for a Construction Loan. By doing so, you can meet both needs at the same time. Construction loans are more easily obtainable since plots and houses or buildings add more value.

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Venus W. Jones

For the last eight years, I’ve been a travel blogger. I’m now based in Berlin, Germany, and have visited over 80 countries. I’ve lived in over 15 of them, and I hope to continue to explore new cultures and lifestyles. I love traveling by train, bike, or scooter and exploring local markets and food.

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