Home Loan Vs Land Loan: EXPLAINED- You must know these key differences before buying plot or flat

Do you know the difference between a Home Loan and a Land Loan? In case you are planning to buy a property – be it a house or a plot of land and are looking for a loan, know these basic differences to avoid any last-minute confusion. For many people buying a house may not be different from buying a plot of land. They are different in many ways. Know how:-

Home Loan Vs Land Loan

- You get a home loan for purchase of constructed property or the one under construction or for properties that may be constructed in near future.

-You can apply for land loans if you have to purchase a plot of land for residential purposes.

- In case of home loans you get tax benefits for both principle and interest payment, For land loans, you get income tax benefits only for the construction cost.

- In case of home loans, the tenure for payment of loan can be up to 30 years, but in case of loans sought for buying a plot, the repayment duration is up to 15 years.

- In case of home loan, you may loan up to 90 per cent of the value of the property. Land loans amounts against the value are usually lower between 70-80 per cent.

- In case of home loans there are no foreclosure charges for floating rate home loans. In case of land loans, foreclosure charges can apply depending upon bank-to-bank.

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 But both these types of loans involve same amount of due diligence and formalities, irrespective of which loan you apply for. The interest rates and Equated Monthly Installments (EMIs) could have same terms and conditions. The rules for co applicants for either type of loan are also usually same.