Home Loan Vs Land Loan: Understanding Similarities And Differences

A Home Loan is a loan taken to buy a residential property by an individual from a bank or any other financial institution at a given interest rate. You must repay this loan to the bank in Equated Monthly Instalments (EMIs). The purpose of opting for a Land Purchase Loan is to purchase a plot of land for constructing a residential property or for investment as opposed to a Home Loan. 

Still, confused between the two? Fret not; in this article, we will see the similarities and points of difference between both loans to give you a better understanding of them. 

Here are some of the common points between the two loans:

1. Application process

Both types of loans involve a similar application process, where due diligence is required. That means the steps to apply for either loan are largely the same, including submitting necessary documents, undergoing credit checks, and evaluating the property or land.

2. Eligibility criteria

• Applicant must be either salaried or self-employed.
  
• Applicant must be above 21 years old while applying for the loan. 
  
• Salaried individuals should show a minimum income of Rs. 10,000 p.m.
  
• Self-employed individuals must present a minimum business income of Rs.2 Lakh p.a.
  
• Applicant must hold a good credit score.

3. EMI options

Some of the EMI options offered for Home Loans are:

• Home Loan EMIs with a moratorium
  
• EMI on Home Loans with overdraft option.
  
• Home Loans with increasing EMI option

To ease out your Home Loan application process, have a look at the documentation requirements for it beforehand: 

For Home Loan

• Duly filled Home Loan application form along with copies of your photographs
  
• Bank statements of the past 6 months.
  
• Residence and identity proof.
  
• Fee cheque for processing. 
  
• Most recent salary slip/ proof of business/ educational qualification certificates.

Agriculturists who require a Home Loan need to submit some more documents, as mentioned below:

• Title documents of agricultural land that prove landholding.
  
• Statements of the last 2 years of availed loans.
  
• Copies depicting cultivated crops on the land could be in the form of title documents. 

For Land Purchase Loans

To make the loan documentation process faster for a Land Loan, these are the required documents: 

• Signed and filled out application form with photographs. 
  
• Some identity proof- passport, PAN card, voter ID, etc.
  
• Some address proof- voter ID, ration card, driving license, passport, etc. 
  
• Educational qualification- most recent degree certificate. 
  
• Housing documents- approved plans, title documents, etc. 
  

Along with the documentation mentioned above, for an agriculture Land Purchase Loan, you also need to submit: 

• Basic KYC (Know-Your-Customer) documents such as Aadhaar Card, PAN Card, and so on. 
  
• Certificates that show your landholding 
  

A bank statement of your Savings Account might be handy while you apply for a loan for a home or land, along with other related documents.

Click here to apply for a Land Purchase Loan or Home Loan with HDFC Bank.

Read more about Home Loan versus Construction Loan here.

*Terms and conditions apply. Home Loan at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement.