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As the expenses for education are soaring each day, affording a higher academic degree is becoming more challenging. Hence, students aspiring for higher studies or studying abroad might require substantial funds to meet their expenses. Therefore, a loan against property for education can help meet one’s monetary needs without much hassle.
Benefits of availing a loan against property for education
A few of the benefits of availing a loan against property for education are –
- Lower interest rate
Here, lenders keep a property as collateral to disburse funds for education. As a result, the overall risk for a lender is substantially lowered, and thus, they offer a lower interest rate to prospective borrowers compared to unsecured loans. This assists in lower EMIs and helps payment of the loan.
- Availability of schemes
The Government of India has introduced a few schemes for students to encourage education among students. Although multiple schemes are available, but for the ease of understanding, two of them are given below –
- Vidya Lakshmi Scheme: This online portal allows students to apply for financial assistance from a preferred lender. This portal is developed under the guidance of IBA, Department of Higher Education (Ministry of Education), Department of Financial Services (Ministry of Finance) to track, apply and view education loan of different financial institutions.
- Padho Pardesh Scheme: This is a scheme to provide interest subsidy on education loans for students willing to study abroad for masters, M.Phil., and doctorate levels. However, students must remember that this scheme is only for applicants from the minority community.
- Comprehensive coverage
Apart from providing the tuition costs of study, a loan against property for education provides comprehensive coverage for students. Some of the expenses that students can afford with this loan are –
- Exam fees
- Accommodation costs
- Cost of books and uniform
- Library and laboratory fees
- Refundable fees of the institution
- Travelling expenses and others.
- Flexible repayment tenor
With leading financial institutions, students can get LAP for education for a substantial tenor. As a tenor is inversely proportional to the EMI, opting for a longer tenor can significantly ease the monthly financial liabilities of a borrower.
Apart from it, before selecting a lender, check a few pointers to avail maximum monetary amount against a property.
Factors to consider before availing a LAP for education
A few of the pointers to consider before selecting a lender is –
- Loan amount
The loan which a financial institution disburses depends on multiple factors. First, however, candidates must check the LTV ratio of the lending institution as depending on this, the lender decides the sanctioned money. But, apart from it, the property’s type, age, and location also significantly affect the monetary amount.
- Processing fee and disbursal time
Apart from the loan amount, lenders levy a processing fee. Nevertheless, this amount is substantially less, and in addition to it, they must check other applicable charges. However, the disbursal time might vary with lenders, and they must check it beforehand, as students might require funds on an urgent basis.
- Tenor and interest rate
As mentioned above, these two factors affect the affordability of a loan against property for education. So, before applying, check the maximum tenor available and the interest rate. But, individuals must note that a longer tenor might fetch a lower EMI, but this will increase the total number of EMI paid and the total interest paid. So, before choosing the tenor, prospective borrowers must be cautious about this factor.
In India, reputed financers extend pre-approved offers that simplify and expedite loan processing. Such offers are available on various financial products like loans against property, home loans, etc. You can enter your name and contact number to check your pre-approved loan offer.
Also Read: 4 Things to Know About the VidyaLakshmi Education Loan Scheme
Hence, availing a loan against property for education has myriad benefits and helps a student meet the education fund requirement. Also, to get good value of the property for an education loan, one must consider the pointers mentioned above.
