Personal Loan

How you Can Purchase a Land through Personal Loan

An investment in a land purchase has proven favorable to many people. The investment in land is beneficial in many ways; the purchaser chooses to use the land for the residential purposes. The land provides better returns when sold. People try to buy lands but the only thing that stops them is the increasing prices. In the recent years, the prices of land and housing properties have increased significantly. To purchase a land you need to know that it involves a huge amount of money.

To manage the huge amount of money you cannot solely depend on your savings. You might need to opt a loan for land purchase from the bank. For instance, if the price of the land is below INR 20 lakhs you can apply for a Personal Loan instead of a mortgage loan. While you apply for the Personal Loan for the land you might enjoy the benefits such as lower rate of interest, short tenure for repayment of the loan and low processing time.

While applying for a Personal Loan for land you need to consider a few things:

  1. The Category of Land you are Buying: While buying a land you need to confirm the type of land you are about to purchase. The land should not be under the green zone (Agricultural zone) as these lands cannot be used for the residential or commercial purpose. The lenders might not approve the loan on such types of land.
  2. The Type of the Plot: The type of land that you are intending to buy should not be in the remote areas. This type of land could have the danger of encroachment. If the land is in a well-populated area it would be safe from encroachment. It would also have all the other amenities like developed roads, better sewage system, electricity etc.
  3. Location of the Plot: The banks while approving a loan consider the location of the plot. The banks might not approve the loan if the land is in the remote areas and having less connectivity. The plots which are in the middle of densely populated areas have a higher chance of loan approval.
  4. Loan to Value: The banks provide a loan for plot purchase to the applicants up to a certain limit. The plots that are in a secluded location, the banks provide 70 percent of the property value amount. For lands that are in the city or are closer to the city, the bank approves 75 percent of the property value amount.
  5. The Rate of Interest: While applying for the loan you need to survey with as many banks as possible to get the lowest possible rate of interest on the loan. As the rate of interest should be the first concern of the buyer due to the impact it has on the final repayment amount.
  6. Construction Time: You have to make sure that the loan has been processed as pure plot loan. It must have the condition to start the construction in a specific time. If you have plans for construction in the later period you have to apply for a composite loan (a loan for land purchase as well as construction). If the construction is not started on time the banks and money lender might increase the rate of interest.
  7. Risks Involved in a Land Purchase: There are numerous risks that are to be checked for before applying for a loan. The asset like land is subjected to encroachment hence you have to make sure that the land is not in a remote area with low connectivity. The land should not be involved in any type of legal conflict such type of properties do not get loan approval.


Keeping the above factors in mind one can apply for a Personal Loan. As in today’s world, there are many risks that you have to consider while purchasing a land.


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