There’s something very satisfying about having a house of your own, which is why most people in India choose to construct their own dream house rather than buying from real-estate sellers. The first and foremost thing you will need to build your home is a piece of land. And a plot to build a house is not something everyone can afford. This is where a plot loan comes in handy. Many financial institutions in India provide loans against the land. Here are some important things to know before making an application for a loan against land in India.

What Is A Loan Against Plot?

A loan against plot or a land loan is a type of loan provided by financial institutions to purchase the land where the applicant’s house will be constructed. A plot loan can be used to build a factory or commercial building as well.

Benefits of Taking A Loan Against Plot

A loan against plot comes with tons of benefits. Some of them are listed below.

  • Attractive interest rates – The interest on plot loan is appealing. However, it differs from lender to lender. So, do shop around several lenders to get the best deal for yourself. The interest rate on plot loans of well-known financial institutions like PNB Housing starts from 7.35% p.a.
  • Affordable repayment tenures – A loan against plot offers reasonable repayment tenures for applicants. Some lenders provide various repayment options as well.
  • No Pre-payment Charges and Low Processing Fee – Unlike most loans, the processing fee of loan against plot is low. Some financial institutions charge no penalty on pre-payment as well. This also differs from lender to lender. So, make sure to do your research previously. 
  • Minimal Documentation – The process of loan against plot is easy, quick, and requires minimal documentation. It usually takes a week for most lenders to do their inspection and verify all the documents. 

Eligibility Criteria For Plot Loans

It is crucial to know about the eligibility criteria before making an application for a loan against plot. Below is a list of all the documents required to apply for a loan against plot in India.

List of Documents Applicable for All Applicants

  1. Application form
  2. KYC documents: PAN Card, Ration Card, Passport, Driving License, Telephone Bill, Property Documents, Educational Certificates, etc.

List of Documents Applicable for Salaried Individuals

  1. Salary slip of last 3 months
  2. Form 16
  3. Bank statement of last 6 months
  4. Proof of Employment (if your present employer does not match with the information provided in your Form 16)

List of Documents Applicable for Self-Employed Individuals

  1. Proof of business operations by providing any one of the following – Shop Establishment Certificate/Tax registrations-VAT/Service tax/GST.
  2. Bank statements for the last 1 year.
  3. Tax Audit Report and audited financials for the last 3 years.
  4. Latest tax returns for the current financial year.
  5. Sanction letters for any existing loans 

Keep in mind that the borrower must be an Indian citizen to apply for the plot loan. The borrower should not be of age above 70 during the time of loan maturity.


Building your dream house is a lengthy and tiring process. But it can be made easier with proper research. It is important to know all the necessary details before applying for a plot loan.