Important Things to Know Before You Buy a Land

For most of the people in this world, having an own home is one of the biggest milestones in their life. When it comes to buying a home, some people prefer buying it a readymade home using a home loan as the finance.

On the other hand, some people want to buy a plot or land and construct a home using a loan for plot purchase option. If you are also considering to opt for a loan for plot purchase option to buy land to build a home, you need to consider some aspects.

Vital Things to Know before availing of the Loan for Plot Purchase

The Type of Land that You want to Buy 
Before you begin to arrange finance for the land, you will need to know what kind of land that you would like to buy. Are you buying it for your residence, or for agricultural or industrial purposes? You need to confirm this as the loan for plot purchase is available only for residential purposes.

Location 
The next thing that you will need to know is the location of the plots. Make sure that your new plot should fall under the limits of the municipal corporation/municipality. You will need to know that the lender will not approve a land loan if your plot is outside the area covered by the local authorities.

The Tenor 
While the conventional and modern home loans may stretch up to a maximum of between 20-30 years, the land loan tenor is only between 15-20 years. Thus, you should ensure to choose a tenor that matches best with your repayment capacity.

The Rate of Interest 
Check your prospective lender’s land loan interest rates beforehand so that you can use home loan interest rate calculator to determine everything before applying. The digital loan calculators provide you with an exact EMI along with the interest that you will pay after you select the tenor and the desired loan amount on them.

Be Sure of the Purpose of Purchase 
Even before heading to a location to see a plot, you need to be sure of the purpose of your purchase. Be sure if you want to purchase a land using a land loan to build a home, a residential building or want to keep it as an investment for a future resale. When you build a home on a purchased piece of land, it attracts lower rates and doing so ensures and gives the creditor a sense of security.

Know the Risk of your Lender 
Always know that before approving any loan, lenders take into consideration to determine the risk appetite/profile of any land loan applicant. Some of those vital factors include – the purpose of the land purchase (self-use or investment), construction duration (shorter one is less risky for lenders), and current debts that an applicant is repaying.

The Bottom Line
The loan for plot purchase is easier to avail and will serve the purpose of buying it and later construction of a beautiful home now that you are aware of what to consider.

Along with keeping these aspects in mind, you should also check out the terms and conditions of your respective lender so that you can prepare in advance for the loan.

You can apply for a land for plot purchase online after comparing various offers and deals at a third party website and select an offer that matches your needs and budget. All the best!