What you need to know
A plot loan finances the purchase of a residential plot, often combined with a construction loan (plot + construction). Lenders fund only plots in approved residential layouts within municipal or development-authority limits; agricultural land is not financed. Rates are usually similar to or slightly higher than home loans, and LTV is often lower.
Plot loan vs home loan
| Point | Plot loan | Home loan |
|---|---|---|
| Security | Plot of land | Plot + house |
| Land accepted | Approved residential layout; NA-converted where applicable | Any approved residential property |
| Construction condition | Many lenders require construction to start within a set period | Not applicable |
| Tax (old regime) | No deduction for plot alone | 80C principal + 24(b) interest |
| Examples | Canara Site, LIC HFL Griha Bhoomi | All home loans |
Tax treatment
- Plot-only loans get no deduction under Sec 80C or 24(b).
- If you build a house on the plot and the loan is a composite plot + construction loan, interest paid before completion (including on the plot portion) is claimed as pre-construction interest in 5 equal instalments from the year construction is completed.
- Construction must be completed within 5 years from the end of the year the loan was taken, or the self-occupied interest cap falls from ₹2 lakh to ₹30,000.
Before you buy a plot
- Check layout approval, title chain and encumbrance certificate.
- Confirm conversion from agricultural to non-agricultural use where required.
- Verify mutation in the seller’s name in revenue records.
- Check land-use under the master plan and access road.
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Frequently asked questions
Can I get a plot loan for agricultural land?
No. Housing lenders finance only residential plots; agricultural land purchase is financed separately under agriculture schemes.
Does RBI’s 90% LTV apply to plot loans?
RBI’s LTV slabs apply to housing loans; lenders typically set a lower LTV for plot purchase.
For information and comparison only. Loan terms, rates and rules change — confirm with the lender and read the Key Facts Statement before borrowing.