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Factors To Keep In Mind When Applying For A Land Loan
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A land loan is offered by financial institutions for individuals who wish to purchase land for residential purposes. The increase in the price of real estate has made it difficult for individuals to afford purchasing land with their savings alone. Hence opting for a loan for land purchase is the best source of finance available. There is however a number of factors one must keep in mind to ensure they get the best land purchase loan available:
High credit score
Purchasing land is an expensive affair and hence requires additional finance through the help of a land purchase loan . However, most financial institutions do not approve all applications for such loans. Hence having a high credit score is crucial to ensure that your loan application is approved. A credit score gives the financial institution the required information about the individual’s buying habits, past loans etc. All applicants should try to improve their credit score to get a higher loan amount.
The amount of loan the applicant is currently repaying also plays an important role in the decision process. One should try to reduce the amount of loans they are currently indebted for. This not only makes it easier for the financial institution but also puts a lesser financial burden on the borrower and makes repayment process simpler. Before applying for a loan for land purchase, one must try to repay any outstanding loans. This also helps improve one’s credit score.
To get a more affordable land loan, one should try to put in a higher amount as down payment. This makes the plot loan more affordable as the borrower ends up paying a lower amount each month as EMI. Sometimes down payment may also convince the financial institution to charge a lower interest rate.
Tenure of the loan
Financial institutions usually offer a tenure period of one to twenty years for a land loan. Depending on one’s requirements, they can choose tenure of their choice. A longer tenure means that the monthly EMI charged will be lower. A shorter tenure however means that though the EMI charged in higher, the burden of the land purchase loan will be for a shorter period of time.
When you are planning to purchase any plot of land, before applying for a loan with the financial institution, one must conduct enough research to ensure the land purchased is not agricultural land or a disputed piece of land. Ensure that you have all the relevant documents and a high credit score to ensure that your loan for land purchase application is approved.
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 land purchase loan, interest rates required documents etc.
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