Plot loan: Buying land is still the biggest dream of most people. Whether it is to build a house, investing or fixing the hideout after retirement. But rising prices of land are making this dream expensive. In such a situation, the question arises, can you get a loan to buy land too?
The answer is, yes. But, for this you have to take a plot loan, which comes with certain conditions and boundaries. It is quite different from home loan. Therefore, its advantages, rules and interest rates are also different.
What is a plot loan?
You only get a plot loan to buy residential plot. You can take this loan from bank, housing finance company (HFC) or some NBFC. The thing to note here is that this loan is only for vacant land. To build a house, you may have to take a separate house construction loan or you can also take a combo loan.
How should the land be?
Plot loan is not available for all kinds of land. Banks and HFCs usually give loans only on certain conditions.
- The land should be within the Municipal Corporation/Municipality border.
- Land layout should be approved by the government.
- The land should be of registered and clear title.
- The land should be for residential use.
- This loan is not available for agriculture, rural or commercial land.
Which banks can get a loan?
Many large financial institutions in India offer plot loans. Such as SBI Plot Loan, HDFC Land Perchase Loan, ICICI Plot Finance, LIC Housing, PNB Housing. Apart from this, a non-banking finance company (NBFC) like Bajaj Finserv is also available. Their interest rates are slightly high, but documentation can be flexible.
How much plot loan can be found?
You can usually take a loan of land priced up to 70% -80%. You have to make the remaining 20% -30% down payment yourself. If you are taking the Construction Loan together, the total loan amount may increase. In this, banks can also give some additional concession.
What is the interest rate?
The interest rates on the plot loan are slightly higher than the home loan. However, if you intend to build houses on the same plot in future, then both needs can be fulfilled in low interest when adding the Construction Loan.
| Bank/NBFC | Interest rate (annual) | Maximum tenure |
| Hdfc bank | 8.40% | 15 years |
| SBI Realty (plot loan) | 9.50% | 10 years |
| Icici bank | 8.50% | 20 years |
| PNB Housing Finance | 9.25% | 20 years |
| Lic Housing Finance | 7.70% | 15 years |
Source: Site of concerned bank/NBFC (till 8 July 2025)
Is there a condition to build a house?
Some banks (eg SBI, Lic Housing) are conditioned that you will build a house on that plot within 2-3 years, otherwise the loan structure can be reclassified. This means that banks can change the terms and conditions of the loan.
Do you get tax benefit?
You will not get any tax exemption by taking a loan just to buy a plot. But, if you build a house on that land and take a construction loan, then you can get tax exemption under Section 80C (Principal) and Section 24 (Interest) like a home loan.
Documents required for plot loan
- Identification proof: Aadhar card, pan card
- Income proof: Salary Slip, IT Return
- Land connected paper: Title Deed, Agreement to Sale, Approved Layout
- Bank statement (3–6 months)
- Passport Size Photo
Some banks release a seance letter before cell deeds, while some release loans only after registry.
When will you not get plot loan?
- If the title of the land is not clear.
- If there is any dispute or outstanding on the ground.
- If that land is in the gram panchayat border and is not approved.
- If it is agricultural land.
- Is it a profitable deal to take a plot loan?
If you are buying a plot in the correct location and plan to build a house in future, then the plot loan can be a smart financial tool. But if a house is not to be built and taking land only for investment, then it is important to understand aspects like interest rate and tax exemption carefully.
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