Plot Loan vs Home Loan: Understanding the Distinctions
While both products involve real estate finance, their regulatory rules, risk profiles, and tax benefits diverge significantly.
1. Asset Being Financed
A Home Loan is granted for ready-to-move, under-construction apartments or homes. A Plot Loan is sanctioned strictly for buying residential land parcels.
2. Maximum Loan Tenure
Home loans offer tenures extending up to 30 years. Plot loans typically cap tenures at 15 to 20 years.
3. Loan-to-Value (LTV) Ratio
Home loans finance up to 75% to 90% of property cost. Plot loans generally require a higher down payment, financing 60% to 75% of the plot’s registered value.
4. Tax Deductions
Plot purchases do not qualify for Section 80C or Section 24(b) tax deductions until construction commences and finishes. Once construction completes, regular housing loan tax exemptions apply.