Plot Loan vs Home Loan Difference and Benefits

Plot Loan vs. Home Loan – Understanding the Difference

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Plot Loan vs. Home Loan – Understanding the Difference

5 min 18 Aug 2025

Highlights:

What is a Plot Loan?
What is a Home Loan?
Plot Loan vs. Home Loan – The Key Differences
Why Many Buyers Choose Home Loans Over Plot Loans?

Choosing between a plot loan and a Home Loan depends on your end goal. You might prefer the flexibility of buying land and building to your own design, or the convenience of moving straight into a completed property. While both options fall under housing finance, they cater to different needs and come with distinct features worth understanding.

What is a Plot Loan?

A plot loan is designed specifically for purchasing a parcel of land intended for residential construction. This means you can buy a plot now and build later — but it’s important to note that the land must be for residential use, not agricultural or industrial.

In most cases, you’ll be expected to start construction within a specified time frame. The loan is generally available for plots in approved housing societies, municipal zones, or residential layouts that comply with local regulations.

What is a Home Loan?

A Home Loan, on the other hand, is meant for buying a ready property or an under-construction home. It comes with a flexible repayment tenure extending up to 32 years.

Plot Loan vs. Home Loan – The Key Differences

Here’s a clear comparison between a plot loan and a Home Loan:

Feature	Home Loan	Plot Loan
Purpose	Purchase a ready/under-construction home or build on owned land	Purchase residential land only
Tenure	Up to 32 years	Generally up to 15 years
Tax Benefits	On both principal & interest	Only if construction is completed (and follows within set timelines)
Eligible Property Types	Urban and semi-urban residential properties	Residential plots in approved areas only

Why Many Buyers Choose Home Loans Over Plot Loans?

While plot loans offer flexibility in designing your home, Home Loans often have a wider appeal. Here’s why:

Tax Benefits – You can claim deductions under Section 80C (on principal) and Section 24(b) (on interest) of the old tax regime right after you start repayment for a self-occupied home
Higher LTV Ratios – You may be eligible for a larger loan amount in proportion to the property value
Longer Tenures – With up to 32 years to repay, EMIs can be more manageable.

FAQs – Plot Loan vs. Home Loan

No, Home loans are meant for ready, under-construction, or self-constructed homes on owned land — not for purchasing standalone plots.

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