lic housing plot loan

Editorial Team: One Touch Finance

Thinking about buying a plot of land? Maybe it’s for your dream home, maybe it’s an investment; either way, here’s what to keep in mind.

Either way, you’ll probably need a loan. And that’s where things get confusing.

This guide breaks down what you need to know about plot loans. No fancy jargon. Just real information to help you make a good decision.

What’s a plot loan anyway?

A plot loan is money to buy vacant land. That’s it. It’s different from a regular home loan because you’re not buying a house. You’re just buying the ground.

Here’s how they’re different:

Plot loans vs home loans:

• Plot loans have higher interest rates
• You can borrow less (usually 80% of the price instead of 90%)
• The loan period is shorter (up to 15-18 years instead of 30)
• Getting approved is harder
• They want more paperwork from you

Usually, you get to borrow 70-85% of what the plot costs. You have to pay the rest yourself.

What does the RBI say about this?

The Reserve Bank of India (RBI) is basically the boss of banking rules in India. They say:

• Banks can’t lend you more than 80% of the plot’s value
• You need to prove you’ve had a steady job for at least 2 years
• The plot needs to be in a safe, legal area
• You need real paperwork showing you own the land

Banks that give plot loans

Here are the main banks you can go to:

LIC Housing Finance

What they’ll give you:

• Between ₹10 lakhs and ₹2 crores
• The repayment tenure is 15 years.
• They’ll lend up to 80% of what the plot costs

Who can get it:

• You have to be between 21 and 65 years old
• You should possess a work experience of no less than two years
• Your plot has to be in an area the government approves

How to find them:

• Go to www.lichfl.com

SBI (State Bank of India)

What they’ll give you:

• Up to ₹1.5 crores
• 10-year repayment period

How to find them:

• Go to www.sbi.co.in
• Look under Personal Banking > Loans > Property Loans

HDFC Bank

What they’ll give you:

• Up to ₹3 crores
• Up to 15 years to pay it back

How to find them:

• Go to www.hdfcbank.com
• Look in the Home Loans section

Stuff you should compare

1. Interest rates

The interest rate you actually get depends on a bunch of things:

• How good your credit score is
• How much money do you make
• Be it salaried employment or business income
• How much of the plot are you borrowing for
• Where the plot is
• What the RBI decided this month

Real talk: When a bank says “rates starting from 8%,” they don’t mean you’ll get that rate. That’s just their best rate for their best customers. Your rate might be higher.

2. Fees

Banks charge money just to process your loan. Here’s what to expect:

Processing fees:

• Usually around 0.5% to 1% of the loan amount
• SBI is cheaper at 0.35% (capped at ₹15,000)

Other stuff you might pay for:

• Documentation fees: ₹1,000 to ₹5,000
• Legal paperwork: ₹3,000 to ₹10,000
• Technical check of the land: ₹2,500 to ₹7,500

Add all this up before you decide. Sometimes a bank with a lower interest rate costs more overall.

3. How long does it take

Different banks are faster than others:

• LIC Housing: About a week to 10 days
• SBI: About 15 to 20 days
• HDFC: About 10 to 14 days

But this changes depending on:

• How good your paperwork is
• How complicated the land’s history is
• How busy the bank is right now

4. Can you pay it back early?

Sometimes you want to pay off your loan before the time is up. Here’s what you should know:

• The RBI says banks can’t charge you a penalty for early payment on floating-rate loans
• Fixed-rate loans might have different rules
• Always ask the bank about this before you sign

Papers you need to bring

Get these ready before you even call a bank:

Money stuff:

• Last 3 months of paychecks
• Last 2 years of your tax forms
• Letter from your boss saying you work there

Land stuff:

• The deed to the land
• Old documents about who owned it before
• A paper that shows nobody else has a claim on it
• The approved map from the government
• Property tax receipts (if you’ve been paying them)
• Permission from the government to use it the way you want

Personal stuff:

• ID card (PAN)
• Aadhaar card or passport
• Bills showing where you live
• Bank statements from the last 6 months

Legal stuff you should check

Before you apply, make sure:

• The land’s official number matches government records
• The government has approved this land use
• It’s marked for the right thing (houses, business, farm, etc.)
• Nobody else is using the land illegally
• You can actually reach the land (is there a road?)
• The boundaries are clear

Your actual interest rate will depend on

Different things change what rate you get:

Your credit score:

• Higher score = lower rate
• Below 650: Hard to get approved
• 650-700: Normal rate
• 700 and up: Better rates

Your job:

• Regular job: Standard rate
• Government job: Sometimes lower
• Your own business: Often 0.25-0.50% higher

How much are you borrowing?

• Borrowing 80% of the price: Normal rate
• Borrowing only 70%: Might get a break
• Borrowing less money overall: Sometimes higher rate

How big is the loan?

• Bigger loans: Sometimes lower rate
• Smaller loans: Normal or slightly higher

How to actually apply

Step 1: See if you qualify

Check:

• Are you between 21 and 65?
• Have you worked for 2+ years?
• Do you make steady money?
• Is your credit okay?

Step 2: Get your papers together

Grab all those documents we talked about. Make copies. Organize them.

Step 3: Talk to a few banks

Don’t just go to one bank. Call 2 or 3. Ask them:

• What’s your actual rate for someone like me?
• What are all your fees?
• How long does this take?
• Do you have any special programs I might qualify for?

Step 4: Fill out the application

Apply online or go in person. Give them everything they need. Answer their questions fast.

Step 5: Wait for them to check everything

They’ll:

• Look at your paperwork
• Check the land
• Look at the land’s history
• Send you an offer letter

This takes 7 to 20 days, usually.

Step 6: Say yes and get your money

Read the offer letter carefully. Make sure you understand everything. Then say yes. The bank sends the money to whoever’s selling the land.

Important stuff to remember

1. Rates keep changing: Banks change their rates all the time. Always ask what YOUR rate would be today.

2. That “starting from” rate? It’s probably not you: Banks advertise their lowest rates. You may not receive that unless you meet the highest eligibility standards.

3. Things take time: Even if they say 7 days, it might take longer. Plan for it.

4. Get it in writing: Don’t trust promises. Everything should be in the paperwork.

5. Read the fine print: Know what you’re agreeing to before you sign.

6. Check the full price: Don’t just look at the interest rate. Add up all the fees. See what actually costs more.

Red flags to watch for

Watch out for:

• Someone’s pushing you to borrow more than you can handle
• They’re rushing you
• They won’t explain what stuff costs
• They won’t tell you what the fees are
• They want you to pay money before you get approved
• Something doesn’t feel right

Trust your gut.

Where to get real information

Go straight to the sources:

1. Reserve Bank of India (RBI) – The rules https://www.rbi.org.in/

2. SBI – For their loans https://www.sbi.co.in/web/personal-banking/loans/property-loans

3. HDFC Bank – For their loans https://www.hdfcbank.com/personal/borrow/popular-loans/new-property-loan

4. LIC Housing Finance – For their loans https://www.lichfl.com/

5. National Housing Bank (NHB) – Government policy stuff https://www.nhb.org.in/

6. AXIS Bank – Another option https://www.axisbank.com/retail/loans/property-loans

Important: Read this

Rates, fees, and what they’ll lend you change all the time based on:

• What the RBI decides
• What each bank decides
• Your personal money situation
• Where the land is
• How things are going in the economy

Always ask the bank what YOU would get right now. Don’t just go by what their website says.

This guide is just to help you understand. It’s not actual financial or legal advice. If you need real advice, talk to a financial person or a lawyer.