Buying a plot or villa is an exciting step towards owning your dream home. It’s important to explore the different financing options available to make an informed decision that suits your unique situation. This comprehensive guide will help you understand some of the most common financing options, so you can choose the approach that fits your needs. To ensure a smooth process, it’s essential to have your finances in order first. This includes setting aside enough funds for a down payment or ensuring that you meet the requirements for a mortgage.
In some cases, buying a plot or villa may require an upfront payment—either at the time of signing the contract or before construction begins. In this article, we’ll explore some of the most common methods for financing a plot or villa.
1- Home Loans:
Home loans are a popular financing option for buying a plot or villa. These loans are typically offered by banks and financial institutions and are secured against the property being purchased. The loan amount, interest rate, and repayment terms are determined by the lender based on factors such as the borrower’s credit score, income, and the property’s value. The borrower is required to provide a down payment, usually around 20% of the total purchase price. Home loans typically offer lower interest rates than other types of loans and can be repaid over an extended period, usually up to 20 or 30 years.
In Bangalore, the average ticket size of home loans increased by 9% from INR 32.68 lakh in 2019 to INR 35.58 lakh in 2021. According to the Reserve Bank of India (RBI), the outstanding amount of housing loans in India grew by 10.2% year-on-year in January 2022.
2- Mortgages:
Mortgages are similar to home loans, but they are specifically designed for property purchases. Mortgages are secured against the property being purchased, and the borrower is required to provide a down payment, usually around 20% of the total purchase price. The interest rate and repayment terms are determined by the lender based on the borrower’s credit score, income, and the property’s value. Mortgages can be obtained from various financial institutions, including banks and non-banking financial companies (NBFCs). Mortgages offer lower interest rates than other types of loans and can be repaid over an extended period, usually up to 30 years.
In Bangalore, the average mortgage loan size increased by 11% from INR 28.21 lakh in 2019 to INR 31.40 lakh in 2021. According to the RBI, the outstanding amount of mortgage loans in India grew by 10.4% year-on-year in January 2022.
3- Down Payment Assistance Programs:
Down payment assistance programs are designed to help first-time homebuyers who may not have the funds for a down payment. These programs are typically offered by state and local government agencies or non-profitable organizations and provide grants or loans to cover the down payment and closing costs. The borrower must meet certain income and credit score requirements to qualify for these programs.
The Pradhan Mantri Awas Yojana (PMAY) is a government-backed scheme that offers financial assistance to eligible borrowers, including those looking to buy a plot or villa. Under this scheme, borrowers can receive a subsidy on the interest rate for home loans, along with other benefits such as reduced processing fees. As of March 2021, over 1.2 crore houses have been sanctioned under PMAY.
4- Personal Loans:
Personal loans are another financing option for buying a plot or villa. These loans are typically unsecured, meaning they are not secured against the property being purchased. Personal loans are based on the borrower’s credit score, income, and other factors. These loans can be useful for borrowers who need to cover the down payment or closing costs of a property purchase. However, they typically have higher interest rates than home loans or mortgages and shorter repayment terms.
According to RBI data, the outstanding amount of personal loans in India grew by 14.3% year-on-year in January 2022. In Bangalore, the average personal loan size increased by 12% from 2019 to 2021.
In conclusion, owning a plot of land is a great investment opportunity for anyone looking to secure their future. With the increasing demand for land, especially in prime locations like Bangalore, investing in a plotted development project like those offered by Merusri can be a wise decision. Fortunately, there are several financing options available that can help make investing in a Merusri plot more accessible to a wider range of people.
It’s always important to do your research and choose a reliable developer with a good track record of delivering quality projects. With the right investment and planning, owning a plot of land can be a valuable asset that provides long-term financial stability and peace of mind.
