Plot Plus Construction Loan: How It Works, Eligibility & Tax Benefits
Buying a residential plot and constructing a home on it is a preferred choice for many homebuyers in India. A Plot Plus Construction Loan simplifies this process by combining both requirements into a single loan facility.
This blog explains how a plot plus construction loan works, eligibility criteria, and applicable tax benefits, with expert guidance from Wood Capital.
What Is a Plot and Construction Loan?
A plot and construction loan is a home loan that finances:
- Purchase of a residential plot, and
- Construction of a house on that plot
Instead of taking two separate loans, borrowers get one structured loan with phased disbursement.
How a Plot and Construction Loan Works
Step 1: Plot Purchase
- The lender releases funds for plot purchase after legal verification
- The plot must be residential and approved
Step 2: Construction Phase
- Construction must usually start within a specified period
- Loan is disbursed in stages based on construction progress
Step 3: EMI Structure
- Interest is charged only on the disbursed amount
- Full EMIs begin after final disbursement
Wood Capital helps structure the loan to match lender-specific policies.
Eligibility Criteria for Plot and Construction Loan
Eligibility generally depends on:
- Age (typically 21–65 years)
- Stable income (salaried or self-employed)
- Credit score of 700 or above
- Clear ownership of the plot
- Approved construction plan
Wood Capital evaluates borrower and property eligibility before application.
Loan Amount & Tenure for P+C Home Loan
Loan Amount
- Based on income and repayment capacity
- Linked to plot value and construction cost
Loan Tenure
- Up to 25–30 years depending on lender policies
Documents Required for P+C Home Loan
- Identity and address proof
- Income documents
- Plot sale deed
- Approved building plan
- Cost estimate from engineer
Wood Capital assists in preparing and verifying documents to avoid delays.
Tax Benefits on Plot and Construction Loan
Interest Deduction – Section 24(b)
- Tax benefits on interest apply after construction is completed
- Maximum deduction up to ₹2 lakh per year for self-occupied property
Principal Repayment – Section 80C
- Deduction up to ₹1.5 lakh on principal repayment
- Available only after possession
Tax benefits are subject to prevailing Income Tax rules.
Common Mistakes to Avoid
- Buying unapproved plots
- Delaying construction beyond lender timelines
- Ignoring legal and technical checks
Professional guidance helps prevent rejection.
Why Choose Wood Capital?
Wood Capital offers:
- Lender comparison for best rates
- Eligibility assessment
- Documentation and legal coordination
- Faster approvals and disbursement support
Conclusion
A Plot Plus Construction Loan is an ideal solution for buyers planning a customized home. Understanding its working structure, eligibility, and tax benefits ensures a smooth borrowing experience.
With Wood Capital Finance Limited ’s expertise, borrowers can secure the right loan structure and complete their home construction with confidence.