The plot to be purchased should legally and technically be acceptable for the purpose of creating a mortgage.

Is the Plot Eligible for Loan?

Before sanctioning a plot loan, the bank ensures that the property is both legally clear and technically sound. Only such plots are considered suitable for mortgage purposes.

How Much Loan Can I Avail?

The amount of loan you can get for purchasing a plot depends on two key factors:

• Loan-to-Value (LTV) Ratio: For plot loans, LTV is calculated based on the purchase price of the plot—not its market value, as in home loans. As per regulatory guidelines, the maximum LTV for plot loans is typically lower than that for home loans.

• Income Eligibility: Your income plays a crucial role in determining the maximum loan amount you qualify for. The lender will assess your repayment capacity based on your earnings. You can estimate your eligibility using our income calculator.

What About Interest Rates?

Plot loans usually come with a floating (variable) interest rate. These rates are linked to benchmarks such as:

• A bank’s MCLR (Marginal Cost of Funds-based Lending Rate)

• The PLR/FRR of a Housing Finance Company (HFC)

While the spread (or margin) determined at the time of sanction remains fixed, the total interest rate will fluctuate depending on changes in the MCLR or FRR declared by the lender from time to time.

How Do I Repay the Loan?

The repayment of your plot loan is made through Equated Monthly Installments (EMIs). Each EMI consists of two parts:

• A principal component

• An interest component

Although the EMI amount remains constant, the share of interest and principal changes with time—more interest is paid in the early stages, and more principal is paid in the later stages.

The maximum tenure for plot loans is up to 20 years, subject to the borrower’s age and profile. A longer tenure means lower EMIs, but it also increases the total interest paid over time.

Use our EMI and amortization calculators to see how your loan would be structured.

Can There Be Co-Owners or Co-Applicants?

Yes, if the plot has multiple owners, then all owners must also be co-applicants for the loan. This is a mandatory requirement.

Additionally, a co-applicant can be added even if they are not a co-owner, usually to boost income eligibility. However, lenders only permit close relatives—such as spouse, parents, or siblings—to be included as co-applicants.

Can I Make Prepayments or Close the Loan Early?

Yes, you’re allowed to prepay part of the loan or foreclose the entire loan at any point during its term.

If your plot loan is on a floating interest rate, as per RBI and NHB guidelines, lenders are not permitted to charge prepayment or foreclosure penalties.

When prepaying, you can choose to either:

• Reduce your loan tenure

• Lower your EMI

Are There Any Fees Involved?

Yes, lenders charge a processing or administrative fee to evaluate your loan application:

• For salaried individuals, most banks charge a flat fee (usually ₹10,000 + GST)

• For self-employed borrowers, the fee may be up to 0.5% of the loan amount

We assist you in getting the best deal with the lender and often refund a portion—or even the full amount—of the processing fee, making the loan more affordable.

How is Each EMI Split Between Principal and Interest?

Each EMI you pay is divided into:

• Interest payment (higher in the early years)

• Principal repayment (increases as the loan progresses)

The loan tenure significantly impacts this ratio. A shorter loan term means you pay off more principal in each EMI and save on total interest.

To visualize this clearly, generate an amortization schedule using our online tool—it will show how your loan balance reduces over time with each EMI.