Site Purchase Loan

A Site Purchase Loan is a financial product specifically designed to help individuals buy a residential plot or piece of land. Unlike a home loan, which is for purchasing a constructed property or building a house, this loan is focused on acquiring land, which may later be used for construction or held as an investment.

Banks and non-banking financial companies (NBFCs) offer site purchase loans with eligibility criteria based on the borrower's income, credit score, employment type, and repayment capacity.

Key features of a Site Purchase Loan include:

• Loan-to-Value (LTV) ratio typically up to 70-80% of the plot value.

• Tenure ranging from 5 to 15 years.

• Applicable mostly to plots within municipal or approved layouts.

• Often comes with the condition that construction should begin within a certain time frame (for example, within 2 years of purchase).

Benefits:

• Enables land ownership without full upfront payment.

• May offer tax benefits if construction begins within stipulated time (under Section 80C for principal repayment and Section 24 for interest, once the house is constructed).

Note: Tax benefits are not available on the plot loan itself unless it is combined with a home construction loan.