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How To Calculate Land Loan Emi?
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A land has been a great investment and a source of pride for several buyers. But, most people need to avail a land loan to buy land. The documentation for plot loan is not easy. But, most people cannot estimate the EMI for land purchase loan accurately. The common reason is that several factors are involved in determining it. So, explore core factors influencing plot purchase loan EMI in this article. Then, you can calculate an approximate EMI for the same.
Similar to a home loan, the principal amount of land loan involves several factors. Along with standard expenses such as legal charges, processing charges and taxes, a part of land's cost is included as per the loan to value ratio. Loan to value ratio (LTV) and fair market value of the land are determined by lender or lender’s third party associates. These factors are then used to calculate the principal amount of the said plot loan. Though, most lenders would assure up to 80 to 85% of the land value as plot purchase loan. But, a lender will customise the LTV as applicable to your land purchase loan application.
Rate of interest:
Most borrowers want the lowest interest rate possible. But, loan for land purchase is an uncommon and complex line of credit. Therefore, several factors will come into play. Everything from a credit score, debt to income ratio, current liabilities, legal complications in property, location of the property will affect the applicant’s prospects. They will determine your ability to repay the loan for land purchase. Property details will determine if it is a safe and attractive investment for the lender. Based on these two factors, a lender determines the applicable rate of interest.
Lenders determine the interest rate and the principal amount as per land loan application. However, several factors of this line of credit are under your control. You can adjust repayment option, tenure, etc. to ensure that you can afford to repay your plot loan EMI every month easily. But, handle more than 15 to 20% of land value as a down payment. This will impact your interest rate and tenure since you would have lesser principal amount to begin with.
So, ask the right question to land purchase loan consultants and relationship officers. They will enable you understand eligibility criteria as well as estimate EMI. Use this information to make necessary adjustment and get essential documents. You can also use it to calculate approximate land purchase loan EMI. So, all the best with this new adventure!
Author Bio :
Aishwarya Mahurkar is an experienced writer concerning the housing finance industry. Her articles help in informing her readers of the processes that cover home loan and plot purchase loan, interest rates required documents etc.
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