Land Loan EMI Calculator to Plan your Finances Smoothly

Many Indians live in or aspire to live in an independent house rather than residential complexes. To start with one needs to purchase a plot of land and then construct a house. But, it is quite an expensive affair. Many people’s financial condition may not support their dream to live in their own homes. To meet such requirements, people can avail a land loan. 

However, one of the most critical aspects is the exact loan amount one can afford so that one can easily repay the amount. The following sections will focus on the land loan EMI calculator, benefits, documents required and more such details. 

What is a land loan or plot loan?

A land construction loan or plot loan is a type of credit facility provided to help people finance the purchase of land or plot. It is provided to build a residential space in the near future. Lenders, usually, offer a repayment period of 20 years for these types of loans. 

Land/plot loan against property 

It is one of the types of loan against property offered by numerous banks and financial institutions in which a loan is offered to the borrower to purchase a plot of land. The loan is provided against a property owned by the borrower.

The loan against property interest rates offered by banks and financial institutions are quite low and competitive as compared to unsecured loans. However, it is advisable to compare the rates from as many lenders as possible. Using a land loan EMI calculator, one can easily accomplish this.

Note: Several lenders extend pre-approved loan offers on loan against land to their existing consumers. Accepting such offers quickens up the loan approval process. Consumers can check their respective pre-approved offers online by visiting the lender’s official portal. They need to log in with their credentials and provide the required details to check their loan offers. Moreover, one can also directly give a call to their respective relationship manager assigned by the lender.

Land/plot loan tax benefits

Nowadays people are increasingly applying for plot loans or land loans to build their dream homes. It is a myth that a loan against land does not offer many tax benefits as compared to home loans.

Listed below are loan against property tax benefits with respect to a loan availed against the land: 

Reduction in pre-construction interest:  People can claim a discount at the beginning of the financial year in which the construction takes place. People can claim a pre-construction interest from that same year. When it comes to a self-occupied property, the maximum tax deduction that can be availed is Rs.2 lakh. 

Deduction under Section 24: A deduction of Rs.2 lakh can be availed under Section 24 of the Income Tax Act. But, the borrower needs to convert the plot loan into a home loan to avail this benefit.

Deduction under Section 80C: The portion of EMI which is paid towards the principal sum can be claimed as a tax deduction under Section 80C of the Income Tax Act. The maximum amount one can claim as a deduction is Rs.1.5 lakh.

Interest deduction: As per the national taxation code, homeowners can avail a significant tax reduction in the interest component of the loan interest rate from their tax bonuses.

Difference between a land/plot loan and a home loan

People often get confused between a land construction loan and a home loan because these two seem similar in terms of the obtaining process, rate of interest etc. However, there are several points of difference which are as follows:

  • In the case of a home loan, the residential property has to be either under construction or where the construction is likely to begin soon. But in a land loan, it does not matter whether the construction is about to begin any time sooner or later.
  • Financial properties offer loans for both residential and commercial properties. On the contrary, generally, a land loan is available only for residential purposes, located within the control or limits of a municipal corporation.
  • One can purchase land with a loan and then avail a home loan to construct a house.

How to use a land loan EMI calculator?

Listed below are the steps to use a land loan EMI calculator:

Step 1: Open an online land loan calculator and enter the loan amount.

Step 2: Enter other details like tenure or duration (in months or years as specified).

Step 3: Enter the rate of interest that the lender is charging.

Step 4: Click on the ‘calculate’ button to get the results.

Step 5: The total interest payable, principal amount and monthly EMI amount will be displayed by the property loan calculator.

Benefits of using a land loan EMI calculator

There are several benefits of using a land loan EMI calculator before availing the loan.

    • It helps to know the amount of loan that one can afford.
    • It helps to get an idea regarding the monthly EMI payments.
    • It helps one to form a financial plan based on the principal amount and the EMI that they can afford.
    • It will give an idea of cash flows and make sure that the construction of the property doesn’t face any challenges. 
    • It makes things simple and saves one’s effort and time by calculating the EMI amount within a matter of seconds.
  • It helps in maintaining safety and confidentiality as people are not required to disclose any personal detail or financial plan. They can start planning their finances accordingly.

Land loan against property documents required

Listed below are the plot loan against property documents required:

  • Duly filled Application form along with the photograph of the applicant
  • Salary slips for the last 3 months
  • Copy of Form 16
  • Cheque for loan processing fee
  • Identity proof & residence proof
  • Bank statement for the last 6 months

Investment in real estate, especially in land is a great source of investment as the value of land appreciates over time. However, there are certain factors like connectivity, and essential amenities which are extremely important in the value appreciation of a region. Therefore, it is recommended to keep these in mind and check loan affordability by using a land loan EMI calculator to make an informed decision.

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