Advantages and disadvantages of buying plots in EMI

November 24, 2022 |

For Indians, owning a plot has always been a measure of financial success. The majority of people hope to own a home at some point in their lives. However, the passage of time causes the investment price for any type of real estate investment to rise. It creates a rush of spectrum within people to invest appropriately in the field. Thus, taking into account the home loan options provided by various banks. Here is a list of the advantages and disadvantages of buying plots in EMI.

1. Advantages of buying plots in EMI

It is not possible for everyone to have the entire investment amount in hand. That’s when EMI options come in handy. EMI allows you to divide your one-time cash payment into small monthly installments that you can pay to the bank to purchase your plot. Obviously, this scheme will cost you extra interest from the bank.

The main advantage of buying plots in EMI is –

  • You can pay the money monthly in installments, which makes it more affordable.
  • You have the opportunity to build equity in the property over time.
  • The interest you pay on your mortgage is often tax deductible.

 

2. Disadvantages of buying plots in EMI

One of the major disadvantages of purchasing plots through EMI is that you end up paying more than the estimated cost of the plot due to the estimated installment amount with interest. The following are some other disadvantages of buying plots in EMI

  • If you miss a series of payments, you could lose your home.
  • The value of your property may not increase as fast as the market overall, so you may not make as much money if you sell.
  • You’ll have to pay closing costs when you take out the loan, which can add to the overall cost of your investment amount.
  • If you do not pay your installment on time, you will be charged a non-payment penalty of 24% – 36% in addition to the late installment payment.

To summarize, the EMI option should not be your first consideration when investing in the real estate market. However, suppose your budget and future plans are positive enough to avoid any negligence, delay in payment, or the ability to close the loan before the estimated time. In that case, you should consider taking out a loan and paying EMI installments on time to avoid additional interest.

Are you eligible for a home loan?

The banks have certain criteria before they approve your request for home loans. They have a series of steps to check your eligibility criteria for applying for a home for buying plots in EMI.

  • The salary slips and bank statements are used to calculate your income level. Maintaining a good income tax file is a must in order to get quick approval for a housing loan.
  • The next step is your savings capability. They look forward to at least 30% of savings capacity by the clients to ensure their ability to repay the loan EMI on time every month.
  • They cross-check upon the EMI you currently have, or any EMI paid earlier successfully. A successful on-time EMI loan payment for a car or other utility in the past is an added advantage here.
  • Based on your savings amount, a backward calculation metric is used to calculate the amount that can be offered as a loan to you.

PS: Having a stable source of monthly income like most IT employees, CA’s, doctors, and public sector employees receive a home loan easily with lower interest rates due to the nature of their jobs.

Conclusion

These advantages and disadvantages of buying plots in EMI must have given you an effective idea of what to anticipate when you apply for a loan to buy plots. The EMI makes your desire and journey to your dream home feasible. You can extensively research which bank offers the best home loan deal based on your budget. You can also get in touch with well-known real estate developers like G Square. We are south India’s largest and Tamil Nadu’s No. 1 real estate developers. Within gated communities, we have a wide range of options for you to choose from. We also offer complete end-to-end guidance and support to all our customers, from purchasing land to successfully handling the loan application. You can contact us through our website for more information.

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