A home loan calculator will help you out with the calculation of your EMI and downpayment. It is easy and convenient to make a calculation instantly without any obligations.
Home or land is an asset and security of every individual. Everyone has a dream to own a house or a plot of hand as a part of the investment. You may feel a land or a home loan will be the same thing but is it so? They are very similar to each other, but they are poles apart. A home is an infrastructure that is ready, however, a plot of land can be used for making a house or it is just an investment.
Both the concepts are very different and the loan you take for each of them is also poles apart. You cannot mix it though it comes under one category. Are you smiling at yourself for thinking home and land loan to be similar? If you are, then you need this write-up to know the difference. To plan for a home loan or a land loan, you will need this.
What is a home loan?
A home loan is an amount of debt given to a borrower for purchasing a property that has been constructed or under construction. You are purchasing a house; it can be a building, a flat, or an apartment. Home loan is given to purchase a specific property where you can reside. After purchasing you can shift and start staying in that house itself? The budget of new houses is always high, and a home loan can finance your house, which you repay in easy EMI monthly.
What is land Loan?
A land loan is given to the borrower for purchasing a plot of land. It is not a property; it will just be a plot of land that you can use for construction or investment purpose. If you are going for a plot of land, you need a land loan and not a home loan. Did you just understand the difference between the two?
Difference between home loan and land loan
Location of property or purpose: A home loan is an amount of debt given to a borrower for purchasing a property that has been constructed or under construction. You are purchasing a house; it can be a building, a flat, or an apartment. Home loan is given to purchase a specific property where you can reside. However, a land loan is used to buy only a plot of land and not any constructed building. The land loan is given for a plot of the plan, provided that it will be used only for residential purposes. The purpose is very different because one is about home and the other just a plot of area or land.
Tenure of the loan: House will cost you more than land. A home cost includes the cost of the land and various other constructional charges. The cost of the home is more than land. Considering the cost, the tenure of repaying will also differ. The tenure of a home loan is more than that of the land loan tenure. A home loan can be available for up to 30 years and a land loan is there for a maximum tenure of 15 years. So, if you are purchasing a home or land, you must remember the difference in tenure.
Tax benefits: There is a lot of difference if you are considering it from the point of taxation. For a home loan, the tax deduction will be applicable on both principal and rate of interest amount. You cannot ignore either of them. However, for a land loan, there will be no tax benefits or deduction. If you are using the land to construct a home, you will surely be getting tax benefits. The tax benefits are available only after the construction is done. Also, tax benefits will be available only on the loan amount you have taken and not on any interest rate.
Loan to value ratio: For a home loan you can get a loan of 75- 90% of the cost of the property. However, in the case of a land loan, the maximum will be 75 to 80% of the loan cost. The percentage in the case of home loans will be high and low for a land loan. If you are going for land and then construct a home, you cannot get more than 80% of the loan on the land cost. So if you are purchasing land for any kind of personal use or any sort of investment, you will have to do a down payment of 20% and 80% will be done by the loan. You must arrange the fund to do your down payment to purchase land.
Wrapping up
A home loan calculator will help you out with the calculation of your EMI and downpayment. It is easy and convenient to make a calculation instantly without any obligations.
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