Indian investors are traditionally inclined towards buying Villa Plots for sale in Chennai either purely as an investment or for building a house. So, if you’re looking to shop for a plot, you’ll not be eligible for a home loan, except for a land loan. Home loans are available just for the property already constructed, under construction, or likely to undergo construction soon. For funding the acquisition of a vacant plot, you’ll need to choose a land loan instead. Although the terms, rates, and processes related to land loans are similar to that of home loans
No Tax Benefits
Unlike a housing loan, which is eligible for a tax deduction for payment of both interest as well as the principal amount, land loans do not offer any such benefit. You can avail of tax deductions as long as you’re constructing a house in the plot. The deduction, therein case, is applicable just for the loan amount taken against construction, and only after completion of the event activity.
Tax Deductions in Villa Plots for sale in Chennai
This is far and away from the most important setback for those choosing a land loan as even though it’s offered for the development of a house, you’re not eligible for a tax deduction for payments made towards the repayment. However, if you begin construction activity on the purchased plot, then you become eligible for tax benefits for that part of the loan. The part of the loan that’s used for the development of a house is often used for a tax write-off. The deduction is applicable only from the year during which the event activity is completed.
Lower LTV for Land Loans
Loan To Value (or LTV) is the quantum of loan you can get against a Villa Plots for sale in Chennai. One can avail of up to 80-85% funding in a home loan (90% in some cases). But for a land loan, the utmost LTV is capped at 70% of the plot value at the best. So, if you’re considering buying a plot for either personal use or as an investment, you’d need to distribute a minimum of 30% of the funds from your pocket.
If the property is situated in smaller cities or towns, the maximum Loan To Value (LTV) ratio for land loans can be lower, at about 50%-60% of the total cost of the plot.
A home loan is available for ready-to-move-in, under-construction or resale properties, and even people who are going to be self-constructed. On the other hand, a land or plot loan is available for the acquisition of a bit of land which will solely be used for residential purposes. A home loan cannot be availed to buy land upon which you intend to build a house. In the same way, one cannot apply for a land loan if they want to buy a DTCP Approved plots in Chennai.
Home loans and land loans are often used interchangeably. It is easy to be confused between the terms and conditions of both sorts of loans, however, these key points would hopefully point you in the right direction depending on your requirement. If you are looking for some of the best housing opportunities across India, then you must check out the CMDA Approved plots in Chennai by jayitri Garden City.