Create Your Land Loan Repayment Strategy

When you opt for a land purchase loan , you must have a repayment strategy for the loan too, especially if the plot loan is one of the many liabilities that you have. A smart choice is to create this plan right from the start and you will have no problemsin meeting your deadlines. Otherwise, it can be tad messy. So, here is how you can create your own repayment strategy for a land purchase loan.

Consider the purpose:

Why did you invest in this particular land? What do you aim to do with it? There are investors who understand that land is a great choice for investment. If you choose the piece of land carefully, it can be a great investment property for resale, which can have a huge capital gain over a period of few years. If you have sizable earnings, you can buy a plot with this loan and avail income tax rebate too. Purchasing a piece of land at a young agewith the help of a plot loan in India is a great idea if you plan to build a weekend or retirement home. So, your purpose will affect your repayment strategy.

Consider repayment option:

With due consideration to your reason to purchase a plot, you must select the repayment option that suits your needs well. Primary repayment options available for borrowers are:

* Step up repayment option
* Step down repayment option
* Accelerated repayment option
* Balloon repayment option

You must choose a repayment option based on two factors. Firstly, it should match your purpose. Secondly, it should be affordable so that you can comfortably repay your land loan throughout the repayment tenure.

Consider tax rebate:

This is a common reason for plot purchase. But, whether you are an investor looking for a deal or a land for building a second home, you must pay due attention to the income tax rebate. It is a bit more complicated than your typical home loan tax rebate too. Rules and regulations differ for land loan, plot purchase and construction loan etc. You will need to consult your tax expert about how the income tax rebate is applicable to you. You must ensure that you make the best of what is available to you on this loan.

Your land purchase loan repayment strategy should optimize all three facets of repayment. In other words, you need a plan that helps you to take maximum advantage of your purchase and repayments. The right strategy will definitely assist you to achieve it.