Land is one of the best investment options. It appreciates quicker than other properties. It can also be sold in parts in case of urgent money requirements. A piece of land will always be in demand due to limited supply. No wonder it is a popular asset choice in India. It might not be as glamourous as homes but raw land can ensure passive income with good returns. 2021 is the right time to buy land to construct your dream home a few years from now. This is because real estate rates are falling amid corona in most of the Indian cities.
The best way to finance the project is a plot loan. The best bank offers competitive rates and the amount is disbursed within 72 hours. Both salaried and self-employed individuals are eligible. However, here’s a look at a few common mistakes while taking the loan. Having sound knowledge beforehand will help you make an informed choice.
1. The Wrong Lender
The first step is to pick a reputed bank for acquiring the loan. You might end up with high interest rates and unfavourable terms without proper research. Choose the one that has minimal documentation requirements and basic eligibility criteria for loans for plots. The rates and charges of processing should also be affordable. The bank experts must be ready to help you at every step of the loan application for added convenience.
2. Not Knowing the Extra Charges
It is important to have a sound knowledge of the processing fees. This will help you plan the finances accordingly. Or else you run the risk of overshooting your budget. The top bank requires a login fee of ₹5,000. The administrative fee is usually 0.75% of the loan amount. Do ask for the prepayment charges of the plot loan as well.
3. Low CIBIL Score
It is one of the most important criteria to consider before opting for a loan. The top bank in India does not disburse funds without an impressive credit profile. Make sure your score is 750 and above. It can help you qualify for the desired loan amount by boosting the approval probability. Avoid falling into debt traps, clear utility bills on time and try not to reach the credit limit at all times. These simple steps can help you increase your score to acquire a plot loan in India quickly without hassle.
4. Floating Interest Rates
Choose a bank that offers floating rates. This means the interest rate will change when RBI makes an amendment. It is a good option if the plot loan is for a tenure above 5-7 years. There could be chances of a lower rate. Fixed rates on the other hand remain the same throughout the tenure. This is irrespective of any changes in the future years.
5. Not Checking EMI Affordability
Use a calculator to know your monthly EMI. Not checking this beforehand might put you into a serious financial crunch. Enter the loan amount, tenure and rate of interest. You can now see the repayment amount, interest amount and EMI all at once. This will help you manage your finances better and pay on time.
Lack of complete documentation, incorrect information on the forms and low eligibility are other common mistakes of applicants. Double-check beforehand for quick processing.
