Sunday, March 1, 2015

How to go about buying a residential plot? – TGS Layouts Tips

Different local authorities regularly come up with residential plots for sale and distribution for individual citizens. Jaipur Development Authority is distributing land plots of different sizes currently and in the recent past Haryana Urban Development Authority has offered the public allotment of residential plots of different sizes in Palwal and Faridabad. Yet there are many other state governments who declare allotment of lands and distribute it through local or municipal authorities. In bigger cities and metropolitans, sale of apartments is more in vogue due to paucity of land at economical prices. But in smaller cities buying land is still a trend that is being preferred.

The realtors opine that in category B and C cities the percentage of the buyers of land is higher compared to metropolitans. The percentage of land buyers in smaller cities are more owing to the desire of building a house on the land and potential land buyers are in the percentage range of 30 to 35 percent in smaller cities while such percentage is only 5 to 7 percent in metro cities. In cities like Mumbai this percentage is even lesser and in the range of 2 to 3 percent due to the paucity of land in the city limits. Many people desire to settle down in their home towns and start working towards their goal in advance by buying a plot. They thus take a loan and construct a home which helps them achieve their plans.

How to go about it?

The process of buying a plot by taking a loan is entirely different from taking a home loan for buying an apartment primarily because of the difference of the assets involved. The eligibility of the loan amount is different for different assets and one has to figure out what proportion of the money should be used in buying the land and what proportion should be utilized in constructing the house. In case of an apartment the full amount can be taken as a loan but in case of a land and to build a house on it the segmentation has to be done.


An example will make the situation clear. Let’s say one’s loan eligibility is Rs. 60 lakhs and you decided to spend Rs. 45 lakhs on buying the land and the rest of Rs. 15 lakhs can be spent on the construction of the house. Let’s suppose if you have to change your mind and decide to spend Rs. 40 lakhs and spend the rest of Rs. 20 lakhs on the house, you have this flexibility to do so.

But in case of buying an apartment the flexibility would be limited and the lending banks disburse the amount of loan in installments. The composite loans are first of all disbursed for the acquisition of land and then for the subsequent construction of the building.

You may be asked for the submission of certain documents for the loan approval and also the documents relating to the land that you intend to buy namely the allotment letter issued by the development authority, copy of the drawings of the proposed property duly approved which is to be purchased, title deed, sale agreement and also the chain of documents in case of resale. Apart from these the borrower has to submit the title document of the plot in original along with the map duly approved by the authority with the estimate of the amount needed for construction.

If one wants the loan amount for the construction of the house one has to submit the building plan duly approved by the local authorities and the construction costs has to estimated and approved by an architect or a civil engineer. The construction of the house has also to start within the stipulated period as mentioned in the loan agreement or else the lending interest may go up as per the agreement with the lending institutions to higher rates as high as 13 to 14 percent as well. Banks like the ICICI restricts the construction to be completed within a time period of two years from the date of disbursement of the first installment of the loans.

Loan eligibility and interest rate

The amount that you are eligible for depends on the income and the credit profile, repayment capacity, savings history, spouse’s income and the number of dependents in the family and such other relevant factors. The Loan to Value ratio (LTV) is generally 75 percent for acquisition of plots. For composite loans of plots and construction of homes the LTV goes up to 85 percent for an amount of up to Rs. 20 lakhs and 80 percent for loans of up to Rs. 75 lakhs. This implies that if the LTV ratio is 75 percent of the property value of Rs. 50 lakhs a loan will be disbursed of Rs. 37.5 lakhs and the borrower has to pay Rs. 12.5 lakhs from this own pocket.

Interest rates are different in different banks and they come in fixed and floating rates. The rates of interest vary on many factors like tenure, loan amount and loan seeker’s payment and credit history. But the rules regarding the repayment of loan, interest rate change, delays in repayment remain all the same as for the loans for buying an apartment. The tax deduction rules are also the same.

Summary: TGS Layouts sell land plots at very affordable prices in Bangalore / Bengaluru at least 40 percent lesser than the market price. You can post your valuable comments / suggestions here. To view existing customers feedback click TGS Layouts Reviews.

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15 comments:

  1. Sudhanshu PanikarMarch 2, 2015 at 2:28 AM

    Hi, is there anyone applied for loan to buy properties like land or sites in a layout? please share your experience with banks and what mortgage they required if someone is not a salaried employee?

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    1. Hi, if you are not a salaried person and you need loan to buy a plot than you have to show some proof regarding your income. In addition to that you need to submit your existing property details in Bank. Hope this will help you to start the process.

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  2. Its quite different that taking loan for plot in terms of taking a home loan.There are many criteria to getting this loan. Bank will check many field for clearance. The criteria is different for different assets.

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  3. When i got a call from TGS Layouts regarding plots, the way the customer representative suggest me that was awesome. I cant believe when she told me about the price and location.After visiting the sites i booked plot in Kanakapura. But for the plots i was needed to take some amount of loan.In this matter the home loan department of TGS Layouts help me a lot.Thanx TGS Layouts.

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  4. This article concerning about many important terms of land loan. Its quite different about loan process between purchasing a flat and a site. So this article is very much useful for plot buyer , how they will take loan regarding any plots.

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  5. Its completely hell and heaven difference between the loan process of flat and plots.In case of an apartment the full amount can be taken as a loan but in case of a land the loan will provide you, as per how much you will invest in plots and your future home.Its some how difficult to understand these term and condition. But this article is nice for the property buyer.

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  6. Sudhakaran MurthyMarch 5, 2015 at 4:11 AM

    Hi I have bought a plot in Electronic City and paid my mininmum booking amount to the developer now for the rest amount I need some financial help. I have tried several Banks but did not suceed because of no proper follow up. Is there any option available with TGS Layouts for getting loan?

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    1. I booked my plot by giving booking amount and still I didn't find any difficulties in paying rest amount. I have heard people discussing about taking loans but I am not clear about it but you can find it by calling any of your concern person in TGS Layouts if they have some solution to it or not.

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  7. In Bangalore people are getting suffer for loan process when they are purchasing any plots. The loan process of plots is very much different from the loan for flats. This article can give you enough knowledge , if you are buying any plots.

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  8. What I found is getting loan for apartment is quite easy then on plots. This article summarize all the difference between both situation and I found it helpful for my future if in case I need any financial help. For TGS Layouts they already selling their plots at a very low price so I don't thing any investor need help of financial institutions.

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    1. Hi, I fell this a great opportunity for real investors or for the people who are thinking to invest in real estate market since tgs layouts are selling it in much more lower price than market offering. I have plans to buy some plots in electronic city in bulk and for that I need some financial help so is it possible to get loan for this? Please suggest me if anyone has any idea on this.

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    2. Hi Meeraj, taking loan from a bank for buying plots is a complicated process than from flat or apartment but still you can try it with your real estate adviser if he has some reference. For TGS Layouts they have unique set of professional team in their Loan department who can guide you in the entire process. Hope your query is resolved now.

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  9. Krishnarama ReddyApril 1, 2015 at 12:46 AM

    Thank you very much for coming with this informative article and also I would like to thank all the participant who have given there valuable comments here. I found this article very helpful in understanding the process and it helped me in buying as well as processing the loan amount in my bank.

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  10. Hi I have visited tgs layouts yesterday and found their prices are merely attractive to mid income buyers and also for investors, the truth is who don’t want to save money? I felt all their clause and arguments were justified. Since it was late night and I was getting late so I did not question them much on their price and payment schemes. But one thing I would like to know here is on their different payment option that is 25%,50% and 100% payment. Is there anyone here who can share some clear idea on this?

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    1. Hi I did notice these schemes in TGS Layouts projects and I have asked them what is this differentiation. What I interpreted from this is, most of there projects were pre launched so those investor who are going with 100 percent payment they will get maximum benefit like 8-10 lack lesser than those who are going with 25-50 percent payment option.

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