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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.

Land is a much priced possession these days. As the population increases, the value of land continues to grow. Investors, business owners, builders etc. buy a lot of land. Yet, purchasing real estate for an individual is a complicated process. Hence, being smart and efficient is an absolute must.

Firstly, before buying land, you should identify the plot that suits your purpose. Investors and builders need to make powerful futuristic projections to proceed further. The potential home owners and builders should ensure that the land meets their current and future requirements. Thus, a buyer needs to evaluate the value and the expense ratio because most of them would opt for a plot loan from a bank/financial institution to pay for this plot.

Secondly, taking a plot loan to buy land is a very technical process. A major concern for any kind of loan approval is the repayment ability, applicant and co-applicant’s assets and liability. People must first confirm that the land and all the required documentation are in order, which is not very easy and also greatly affects their loan approval. The potential borrowers would need to talk to finance companies to know the exact documents required. This list is sizable and varies with each company, which could delay the purchase considerably.

Thirdly, you should be able to incorporate the EMIs of your land purchase loan into your monthly cash flow effectively. Builders and investors tend to work out the repayment strategy that is aligned with their business expenses and deadlines. Yet, it is not the case for business owners. Mostly, they need an accelerated repayment strategy, which gives them time to start generating returns on their investment. Home owners must, however, attempt to repay their plot purchase loan as quickly as possible. A longer tenure would typically increase the amount of interest, which doesn’t seem feasible as most people would intend to spend considerable resources in building the weekend home or villa.

As you borrow money to invest in land, you must be cautious enough to realize the implications. You must seek help from finance experts to understand the land evaluation. This will also assist you to ensure that you have not given your consent to a loan agreement that may harm your financial interests. Thus, purchasing land and opting for a land loan need considerable amount of financial and technical resources regardless of your purpose. Make smart choices while you invest in this long term asset.