Plot Loan

Plot Loan Interest Rate 2026

Plot loan interest rates are either similar to or slightly higher than the regular home loans. However, the interest rates vary across lenders.

Lenders usually offer plot loans after factoring in the job profile, credit score, loan amount, employer’s profile, monthly income, EMI/NMI ratio and applicant’s existing relationship with the bank.

Prospective borrowers can consult the Tax Intelligence to compare the interest rates offered by multiple lenders and opt for the one best suited to their budget.

Key Features and Benefits of Plot Loan

1. Plot Loan Interest Rate

• Lenders usually provide plot loans at floating interest rates.
• Many lenders also determine the interest rate for loan applicants based on factors like credit score, loan amount, monthly income, occupation profile, employer’s profile, etc. of the loan applicants.
• The plot loan interest rates are usually similar or a bit higher than the interest rates of regular home loans.

2. Loan-to-Value Ratio

• Lenders usually offer an LTV ratio of up to 80% of the plot value.
• The final LTV ratio set for an applicant would depend on the credit risk assessment undertaken by the lender.
• Factors considered while undertaking credit risk assessment include the credit profile and repayment capacity of the borrower, market value of the property, location of the plot, etc .

3. Loan Tenure

• Most lenders offer plot loans for tenures ranging between 10 and 20 years.
• Lenders would usually consider the repayment capacity of an applicant while setting their loan tenure.
• Plot loan applicants can use the home loan EMI calculator to determine the optimum tenures and EMIs for their plot loans based on their repayment capacity.

Tax Benefits on Plot Loan

• Borrowers are not eligible for availing income tax deductions on the repayment of principal and interest components of the plot loan.
• Such borrowers, however, would be eligible to claim tax deductions on the repayment of home loan availed for constructing the residential property on the plot purchased through plot loan.

Availability of Balance Transfer Facility

• Existing plot loan borrowers can exercise the home loan balance transfer facility to transfer their outstanding plot loan to other lenders at lower interest rates and thereby reduce their interest cost.
• However, the approval of the balance transfer application would primarily depend on the credit risk assessment of the applicant by the new lender.

Processing Fees and Prepayment Charges

• The processing fees charged by home loan lenders for availing a plot loan range from 0.25% to 1.50% of the total loan amount.
• RBI's circular bars lenders from charging prepayment fees on floating rate loans. However, lenders are free to charge or waive off prepayment fees on fixed rate loans.

Plot Loan Eligibility

Below mentioned is the eligibility criteria set by the lenders offering plot loans:

• Resident Indians and NRIs who wish to buy a plot for constructing their residential property can apply for a home loan .
• Lenders generally offer plot loans to fresh applicants/existing borrowers (in case of balance transfer) aged between 18 and 70 years.
• Salaried and self-employed individuals/business owners are eligible
• Loan applicants with credit scores of 760 and above have a higher chance of getting their plot loans approved at relatively lower interest rates.

Other factors that individual lenders might look at while determining the eligibility of plot loan applicants include an applicant's income, liabilities, assets owned, work experience (for salaried) and business continuity (for business owners), etc. Note that the eligibility criteria for plot loans vary across lenders.

How can Adding a Co-applicant be Beneficial?

Adding a co-applicant to the plot loan benefits the applicants in the following ways:

• Enhances the loan eligibility.
• Increases loan approval chances.
• Lower interest rates.
• Increased loan amount.
• Combined income increases the repayment capacity.
• Reduces financial stress.