Potential purchasers in the real estate investment space frequently have to choose between taking out a home loan to purchase an existing property or a land loan to buy a plot of land for future building. The best financing choice will vary depending on personal objectives, financial circumstances, and long-term intentions.
Each financing option has advantages and disadvantages of its own. To assist you in selecting which option could be more appropriate for your needs, this article will examine the main distinctions between Land vs Home Loan.
A land loan is a type of loan used to buy land when there isn't a clear plan to build a house immediately. These loans are frequently utilised for agriculture, future construction projects or speculative investments.
A mortgage, often known as a home loan, is a loan obtained to buy a residential property that has already been built. Buying pre-occupied or newly constructed homes is a common application for home loans.
Home Loan Types:
Advantages of Home Loan Mortgages
Drawbacks of Home Loans
Following are the factors to be considered when confused between home or land loan -
Each type of loan — plot loan vs. home loan — has advantages and disadvantages. Your decision should be based on your risk tolerance, financial capabilities and long-term objectives. A plot loan can be a better option if your top priorities are future development and flexibility.
On the other hand, a home loan can be more beneficial if you're looking for a quick dwelling and stable finances. Take the time to carefully consider your needs and speak with financial professionals so that you may make the most excellent choice for your unique situation. Visit IIFL Home Loans for information on the best home loan interest rates.
Safety issues are a factor. Lenders will not approve a 100% loan for a mortgage. You can borrow up to 80% of the property's current market value from a lender.
While land loans are available for buying a parcel of land to build a house on or as an investment, home loans are accessible for properties that are under construction, ready to move into, or expected to be constructed shortly.
Once the building is finished, you can give your lender the certificates of completion and occupation to convert your land loan into a house loan.
Applying for a home loan with a consistent monthly salary of between Rs. 25,000 and Rs. 30,000 is generally advised, though there may be variations in minimum wage requirements.
If you plan to retire soon, you might not be able to get a house loan because you would need a longer time to pay it back. If the lender thinks you will have enough income to repay the loan before you retire, they may still consider lending you money for a house.
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