Most borrowers tend to confuse between a home loan and a plot purchase loan. Both of these advances have different characteristics that individuals need to be aware of to decide which one they should opt for.
Following are some vital points of difference that one needs to consider to make an informed decision.
1. Basic specifications
Avail home loan to purchase an already proposed or constructed property. On the other hand, a land loan is available to finance the purchase of land allotted to construct a residential or non-commercial property, given that -
- The land location should be within a municipality or corporation limit.
- Location of the land should not be in industrial or village areas.
- The plot must not be engaged in agricultural activities.
2. Loan to value ratio
When it comes to LTV, a lender offers a home loan amount of up to 75%-80% of the property's current valuation. In some cases, LTV can go up to 90%.
However, in case of a land loan, LTV is restricted to 70%. Individuals who want to acquire substantial funds and finance the purchase of a house can initiate a home loan online apply process to avail the amount required.
3. Interest rates
Generally, the home loan rate of interest is lower compared to that of a land loan. It means individuals can enjoy a lower EMI burden by availing a home loan. They can also use an online EMI calculator to compute the monthly instalment against the loan amount opted for.
Besides, there are other home loan offers that borrowers can enjoy if they opt for the advance from leading financial institutions.
Read Also: Know the Difference Between Home Loan and Land Loan for a Suitable Borrowing Decision
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