SBI Realty Land Loan for Plot Purchase, Home – Review, Calculator
If you are on the lookout for a land purchase loan for the purpose of buying a plot and construction of house over it, then SBI Realty loan may be a good choice. The loan facility is available for a maximum amount of Rs. 10 crores and with a comfort able repayment period of up to 15 years.
The important condition for availing this loan is that a house construction should commence within two years from the date of availing SBI Realty land purchase loan.
The beauty of this offering is that you are also eligible to avail and other housing loan for the construction of house on the same plot financed with this loan scheme and thus get the benefit of running both the loans, currently.
Important Terms and Conditions for SBI Plot Loan to Buy Land
Maximum Loan Amount: Rs. 10 crore.
Maximum permissible EMI / NMI ratio: (NMI refer to Net Monthly Income)
- Upto Rs. 2 Lac of Net Annual Income 30%
- Above Rs 2 Lac upto 5 lacs of Net Annual Income 40%
- Above Rs 5 Lac upto 10 Lacs of Net Annual Income 45%
- Above Rs.10 Lac of Net Annual Income 50%
(Sanctioning authority can increase these limits by 10% If customer undertakes to complete house construction With his own resources, and substantiates it with acceptable proof like maturing securities, receivables etc.)
Repayment Terms: Repayable in a maximum of 180 months commencing from the month following the month of disbursement of the loan.
Land Loan Interest Rate: As per Home Loan Scheme
Security to be Provided against the Loan
Following documents and conditions perform as security against SBI Realty loan.
- Equitable mortgage of the plot of land proposed to be purchased.
- Personal guarantee of the spouse/son/daughter if their income is also clubbed with the income of the borrower for computing the eligibility and they are not co-borrowers.
- Interim guarantee of an individual good for the loan amount (to cover the period from the date of sanction and date of creation of equitable mortgage).
Documentation Required for SBI Realty Loan for Buying Land
Following is a general list of documents which are required by SBI with the application to sanction the SBI Realty land purchase loan.
- Arrangement Letter
- Home Loan Agreement
- Guarantee Agreement for Home Loans
- Agreement to Mortgage
- Declaration by the borrower undertaking to construct house within a period of 2 years.
Please note that this is not an exhaustive list and SBI may ask for any other document also as they may require.
Disbursement of SBI Realty Loan for Purchase of Land
Disbursement of SBI Realty loan is directly made to the Urban Development Authority/Housing Society/Seller by issue of Banker’s cheque/Demand Draft crossed “Account Payee Only”.
Time Limit for Commencement of Construction
As already mentioned, an important condition for availing SBI realty loan is the maximum time period stipulated for construction of house, which is 2 years from the date of availing of the Loan. The important condition is followed in letter as well as spirit by SBI. Please note that SBI reserves the right to charge a higher interest rate or even call back the loan in case the borrower fails to adhere to this condition. This implies that the attractive interest rate of 10% to 10.5% availed by you in SBI Realty loan might change something around 14% to 16%, which is a commonly applicable interest rate in case of commercial and personal loans.
At the time of availing the SBI Realty loan, you are required to clear the following undertakings to the bank.
(Undertaking to be obtained from the borrower in respect of ‘SBI Realty’ Home Loans)
The Asst. General Manager/Chief Manager/Branch Manager,
State Bank of India,
‘SBI REALTY’ HOME LOANS FOR PURCHASE OF PLOT OF LAND FOR CONSTRUCTION OF A DWELLING UNIT
Referring to my/our application dated………………..for ‘SBI Realty’ Home Loan of Rs……………….(Rupees…………………………………..only) for purchase of a plot of Land for construction of a dwelling unit thereon, I hereby undertake that I/We will Construct a house on the said plot of land within a period of two years from the date Of availment of the loan. I/We also irrevocably authorize State Bank of India to charge Higher rate of interest as deemed fit by the Bank or even recall the loan, in the event of My/our failure to construct the house within the aforesaid period.
Important Exception the Condition of Time Limit
One important exception to this condition is that in case of loan for plot of land in development projects undertaken by Government agencies, and the date of handing over possession of developed plot to the purchaser in such projects exceeds two years, the maximum time period may be extended by the sanctioning authority in sync with the date of possession.
SBI Realty Land Loan Calculator
SBI Realty Land Loan calculations are similar to any other term loan, where the principal repayment component and interest payment component add together to form the EMI. The EMI is usually fixed for the loan tenure. With the changes in the interest rates coming due to fluctuations in the market rates, the loan tenure period is adjusted.
You can download and use the MS Excel Sheet from the Download section of this website and use it as SBI Land Loan Calculator to the applicable EMIs.
Tax Benefits on Loan for Land Purchase
Please note that the basic purpose SBI Realty land purchase loan is to facilitate the borrowers to finance the purchase of land so that they can construct the house over it. In case you are looking to purchase the land with the basic purpose of speculative investment and looking for capital appreciation in the long-term, then please do not think of availing SBI Realty loan. You will not be fulfilling the primary condition of commencement of construction within two years, and SBI may slap panel interest rate, which are similar to business loans or personal loans.
Many people are under the impression that loans for land purchase do not attract any text benefits under Indian income tax law. But actually it is not the case. Land purchase loans availed with the primary objective of construction of house, are eligible for tax exemptions similar to home loans with following conditions.
- You are not eligible for tax benefit during the construction period. The tax benefit can only be extended after the completion of house construction.
- The principal amount repaid during the construction phase is not eligible for tax detection.
- The interest paid during the construction period is eligible for tax rebate in five consecutive years after the completion of construction. For instance if you have paid a total of Rs. 4 Lakh of interest during the construction phase, then you can get a tax benefit all Rs. 80,000 every year for the next five years.
- In case you have availed and other normal housing loan, then the text benefits are extended on both the SBI Realty loan as well as your second housing loan.