The land is not just a mixture of soil and nature; it is a sense of ownership as well as pride. The piece of land gives security, is an investment, acts as a buffer at the time of crisis. In our country, many look forward to owning land. Many also buy land at an early age for investment purposes. Post-retirement they build their dream house on this piece of land. Some buy land for immediate use also. Land purchase loan is offered by many banks, financial institutions, and other lenders
Tips for buying land
Investing in land doesn’t have a depreciation value. For this reason, people think that investing in land is one of the safest moves. Some of the tips that one needs to keep in mind before opting land purchase are:
Evaluating the value of land: An individual must evaluate the potential of the investment before approaching the lender for a land loan. These are the initial stage factors for considering the land loan.
- We should look for the location of the land
- It is important for the locality of the land. The location of the land should have proper provisions for basic amenities.
- It is important to take into account further development in the area.
- Calculating and analyzing the value of the piece of land over the past decades.
- There must be other constructed homes in that locality as the plot one will buy is for residential use.
- The land has to be feasible for construction.
These points must be positive. These points determine, to a great extent, the worth and feasibility of getting a land loan for the piece of land.
Examining land documents: After getting a positive result on the evaluation of the piece of land, it is important to go through the land records. The individual must go through the following land documents.
- The title deed gives a clear picture of what purpose the land, whether the land is for commercial purpose, agricultural land or residential purpose.
- Encumbrance certificates give the details if any legal or monetary liability is there on the land or not. It is very important to verify if the property is free from legal and monetary cases. The certificate ensures that the individual has complete ownership.
- A release certificate is provided by the bank. The bank gives the certificate to declare that there are no outstanding loans on that piece of land before it is resold.
- It is important to verify the property tax receipts. There should not be any unpaid taxes.
- It is important to ensure that the land is not used as collateral by any of the previous owners.
Debt to income ratio: The debt to income ratio is a measurement of the amount of income one has to the amount of money that goes for paying EMI. The EMI should be considered before taking the loan, taking into account the monthly expenses of the individual.
Having a co-applicant for the plot: Applying for a loan with a co-applicant can help to improve the chances of loan approval and also provide for more favorable loan terms. Having a co-applicant also improves the debt to income ratio.
Good credit score: The lenders of the loan checks the credit history of the borrower. A good credit history speaks well of the individual. The score also reveals how well the debt has been managed so far.
Buying land is extremely attractive because it is one of the oldest forms of collateral. Purchasing a piece of land is the age-old practice. A piece of land cannot be moved, stolen, destroyed or wasted.
The land purchase is considered as an investment because of its growing worth and value. In many cases, the land is costly in high demanding areas. So, the fund is required to purchase a piece of land.