Choose A Plot Purchase Loan To Build A Residential Or Commercial Building

  • Added:
    Feb 20, 2014
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Choose A Plot Purchase Loan To Build A Residential Or Commercial Building Photo by Aishwarya Mahurkar

With the ongoing advent of foreign investment and infrastructure development in India, several two tier cities and cities on the outskirts of metropolises are opening up as great destinations for residential and commercial buildings. For these kinds of business ventures, builders must invest considerable resources in land and construction. Mostly, a plot loan is the perfect option that financial companies can use for their business plan. However, most business owners also realise that plot loan approvals need sizable planning.

Firstly, there will be several documents required for land loans  that would allow the builder to explicitly create residential and commercial buildings on the stated land. These documents will vary based on location, state, type of land, type of ownership etc. Everything from tax plans to ownership and from land use to the surveyor’s sketch is required for getting the loan approval. 

Secondly, you must establish the repayment ability. Though this ability is a necessity, it is the most challenging one too. Based on the bank/financial institution, they would ask for several financial records, bank account statements and repayment track record. In other words, detailed financial documents must be used to display your repayment ability.
Thirdly, while applying for a plot purchase loan , you must understand the variable factors. The interest rates, minor details of the fine print, CERSAI charges and conversion fees, as well as the prepayment changes, can all be negotiated and finalized to suit your financial condition, monthly cash flow etc. You can use the insights of a financial expert to customize your repayment scheme and clauses of the loan contract to suit your cash flow. 

Residential and commercial land developers must consider several factors while taking on the project of building on undeveloped land. Most banks/finance institutions would also take these factors into account while approving your loan. You must understand the value of the land after the development project. Your existing and future neighbours would affect the kind of buyers you would attract into that neighbourhood. Thus, keeping a tab on existing neighbours and potential commercial and residential projects in your locality would also affect your property rates.

Lastly, a builder needs the right finance tools for all possible expenses such as land purchase, construction costs, marketing costs etc. With the right tools, you can enjoy a better margin on your sales. So, you must ensure that you can gather sufficient finance and repayment potential to complete the building project. As long as you can demonstrate the value of the project, you can get the required financial support easily.

Author's Profile

Aishwarya Mahurkar is an experienced writer concerning the housing finance industry. Her articles help in informing her readers of the documents required for land loans processes that cover applying for a plot purchase loan, interest rates required documents etc.

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