Many people have the dream of buying a home, but due to the skyrocketing cost of real estate, this dream may be difficult to realize on one’s own. A housing loan can help you with the financial support you need to realize your dream of home ownership in this situation. Similar to that, you can choose a Loan for Buying Land if you want to invest in a land plot. We’ll talk about these loans and their advantages in this blog.
Loan for buying land
A Loan for Buying Land is a type of loan that is provided to individuals who want to purchase a plot of land. The loan amount that you are eligible for depends on the value of the land, and the loan tenure can vary from 5 to 15 years. This loan is usually secured against the land being purchased, which means that if you default on your payments, the bank can seize the land to recover their money.
- Eligibility criteria: To be eligible for a loan for buying land, you need to have a stable source of income and a good credit score. The lender may also consider the location, size, and type of land before approving the loan.
- Loan amount: The loan amount for a land loan depends on the value of the land. Typically, lenders offer up to 80% of the value of the land as a loan.
- Interest rate: The interest rate for a land loan is higher than that of a housing loan. This is because land is considered a riskier asset as it does not generate any income.
- Repayment tenure: The repayment tenure for a loan for buying land is usually shorter than that of a housing loan. The tenure can range from 5 to 15 years, depending on the lender.
Housing Loan
A housing loan, also known as a home loan, is a type of loan that you can take to purchase a residential property. These loans are typically used for buying apartments, villas, or independent houses. Here are some of the features of a housing loan:
- Eligibility criteria: To be eligible for a housing loan, you need to have a stable source of income and a good credit score. The lender may also consider your age, profession, and the value of the property before approving the loan.
- Loan amount: The loan amount for a housing loan depends on the value of the property. Typically, lenders offer up to 80% of the value of the property as a loan.
- Interest rate: The interest rate for a housing loan is lower than that of a land loan. This is because a house is considered a less risky asset as it generates rental income.
- Repayment tenure: The repayment tenure for a housing loan is usually longer than that of a land loan. The tenure can range from 10 to 30 years, depending on the lender.
Which loan is better for you?
Now that you know the features of both loans, you may wonder which one is better for you. Here are some factors to consider:
- Purpose: If you are planning to buy a property for investment purposes, a loan for buying land may be a better option as it allows you to buy land and sell it later for a higher price. However, if you are planning to buy a property for residential purposes, a housing loan may be a better option.
- Interest rate: If you are looking for a lower interest rate, a housing loan may be a better option as the interest rate is lower than that of a land loan.
- Repayment tenure: If you are looking for a longer repayment tenure, a housing loan may be a better option as the tenure can range from 10 to 30 years.
- Credit score: If you have a good credit score, you may be eligible for a lower interest rate on both loans. However, if your credit score is low, you may find it difficult to get a land loan as it is considered a riskier asset.
Conclusion
So, whether you’re looking to buy a house or a piece of land, getting a loan may be a wise financial move. You can get the money you need to fulfill your dream of becoming a property owner with the assistance of a dependable lender. It’s a good idea to have a backup plan in case the main plan fails. A loan for buying land or housing loan can give you the financial boost you need to accomplish your goals and create a better future, whether you’re a first-time homebuyer or a seasoned real estate investor.