A plot loan is a unique banking instrument that makes it easy to buy land. It is also known as a land loan but is different from a home loan. The contrast between a plot loan and a home loan is that a plot loan can only be availed to buy land for constructing a house. Most lenders in India provide plot and land loans to qualified candidates. You can use them to purchase land in any area of your choosing.

Plot loans are approved only for the purchase of a residential plot of land and if the borrower has definite plans of building a house on the plot of land. Banks usually have a timeframe within which the residential property has to be completed on the purchased land. However, once the house has been completed, the completion or occupancy certificate can then be submitted to the bank after which the plot loan will be converted into a regular home loan. This gives the borrower the freedom to apply for tax benefits on the home loan as plot loans do not qualify for any tax deductions.