Loan Against Industry Plot

Development authorities of various cities regularly come up with plots for residential development for individuals. An ongoing one is by the Jaipur Development Authority for residential plots of different sizes under six schemes, which are open till 2 March 2015 for application. Last year, during September and October, the Haryana Urban Development Authority had offered allotment of freehold residential plots in Palwal and Faridabad. Many municipal authorities and developers take out such schemes.

Buying an apartment is common. But buying a plot of land to build a house on, or for investment, though not common in bigger cities due to lack of availability and very high price, is a trend still seen in smaller cities and towns. Many people, while living and working in bigger cities, plan to settle down in their hometowns, and work towards this goal in advance. Taking a loan to buy a plot and construct a house on it makes this easier to do.

How to go about it?

The process of taking a loan to buy a plot and build a house on it is slightly different from taking a home loan to buy an apartment because of the difference in asset involved. For instance, since loan eligibility is limited, you have to figure out what portion of the money will be used to buy the land, and what portion to build the house. In case of an apartment, the full amount is available to you to buy it; segmentation is not required.

But there is also some flexibility. Say, you had planned to buy a bigger plot to build a house on, and had applied for a loan accordingly. But then you decided to buy a smaller plot. In this case, you will need lesser money for the land, and will have more money to, say, build your house. Let’s take an example. Say, your total loan eligibility as stated by the lender is Rs.60 lakh. Out of this amount, you had initially decided to buy a plot for Rs.45 lakh and spend the remaining Rs.15 lakh on the house. But you changed your mind and decided to buy a plot for Rs.40 lakh or lesser, and spend more on the house. This facility to alter how much you spend on what within the amount given on loan makes the terms more flexible.

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