Loan Against Property for Education Explained

A loan can act as a great facilitator in helping you fulfil your wants, desires, and dreams. From a monetary standpoint, it can also help you gain confidence and financial independence. You can use this amount to buy a new house or property, finance education, or even invest in your business. A loan against property is a type of loan in which you pledge your property in exchange for a principal.

A loan against property can help you get the financial leverage you want. The lender charges you a specific interest rate on the principal amount. You get a period to repay your loan. It is usually done in installments.

This type of loan is an ideal option for you if you don’t have shares or a security deposit to use as a guarantee. In this article, we will explore loans against properties, their features, and their benefits. Also, we discuss whether you should prefer it to finance education. 

What are the advantages of having a loan against property for education?

The following are some of the advantages of applying for a loan against property for education:

• Proper utilisation of your property:

A loan against property is the right way to get the most out of your assets to finance your education. Instead of selling your property, which might have more value in the future, you can just use it as a medium now. Pledging assets to get a loan is better than selling them and getting a lump sum. The latter option is permanent and cannot be reversed under any circumstance. So, it is better to go for a loan rather than sell it for an undesirable price. 

• High loan amount:

Often, banks allow a high loan amount to help you find your education. The loan amount solely depends on the market value of your property; the higher the market value, the higher your loan amount will be. Banks allow you a loan of up to 65% of the value of your property, which you can easily use to finance your education and related expenses. 

• Shortened disbursal period:

As soon as your documents are verified and you get the green card from the bank for the loan, the loan amount gets into your account within 3 business days. The disbursal period can even be faster than this if you have a good credit score and a good loan history. 

• Appealing rate of interest:

Banks charge you a low-interest rate on property loans, which is done to ensure that you give the maximum focus to covering your educational expenses. The interest rates vary from bank to bank but start at 8% per year. The interest rate also depends on your credentials, like your credit score, credit history, loan history, and the offers your bank makes. 

• Optimum loan tenures:

The tenure for repaying your loan is also very reasonable. Banks ensure that you take your time and carry it conveniently. Generally, the tenure ranges between 10 and 20 years, depending on the size of your bank. However, many banks have extended their tenure from 20 to 30 years. 

• Flexibility:

There is high flexibility in the loan application process, which is ensured by providing you with self-tailoring options. You can choose the term of the loan, the type of loan, and the way you want to repay it. A “Flexi” facility in loans against properties for education enables you to only pay interest on the amount you use, rather than paying the interest on the whole amount. 

Should you take a loan against properties to fund your education?

If you have the opportunity to go for an educational loan, then you should prefer taking it instead of going for a property loan. The reason is simple: your interest rate will be much lower, your EMI amount will be less, and you will avail of other student benefits. 

Also, property loans should not be used to finance a business or any other venture, as the loan amount is high and the interest rate is comparatively higher than an education loan. Investing in a loan against properties in your business venture will also help you get some tax benefits. 

Due to technical reasons, sometimes you might not be able to get an education loan to finance your education-related expenses. 

In such a scenario, a loan against property can help you cover your educational expenses. Besides that, various government schemes like the CSIS scheme give student loans up to Rs. 7.5 lakhs. 

Summing it up:

A loan against property for funding Education could be a good possibility for you if you cannot avail yourself of government aid. Also, if you can’t get a student loan or an education loan for technical reasons, you should prefer having a property loan instead. Make sure you know the right market value of your property to get the desired loan amount. 

If you have reached this page by reading this, you must be thrilled to read more content on related topics. If yes, you should visit Piramal Finance to learn more about personal loans, financing tips, investment schemes, etc.