2 min read
25 May 2021

Financing your child’s education at prestigious universities in India and abroad is easier when you take a loan against property customised for education. Not only does this loan offer you a considerable amount, of up to 75% of the property value, but it also gives you flexibility when it comes to using and repaying funds. Before you apply for it, keep the following things in mind to make the most of it.

6 things to know when applying for a loan against property for education:

1. Interest rates and other charges involved

Since a loan against property is secured, it offers funds at nominal interest rates. Still, it is wise to look around and find a lender who offers it to you at the lowest interest. You can use a Loan against property EMI calculator to apply different interest rates to your chosen loan amount and tenor for easy calculation. Another factor to keep in mind is fixed and floating interest.

If you plan to take this loan for a longer tenor,fixed interest may be a better option for you. Keep this in mind and read the terms and conditions carefully. Apart from the interest, there are other charges associated with a loan against property. Check to see the processing fees, penal interest, EMI bounce charges, foreclosure charges and part-prepayment charges.

2. Eligibility criteria that you need to match

Meeting the eligibility criteria for your chosen loan against property is the key to getting your loan application approved. Usually, you need to be an Indian resident, at least 25 years years old, and salaried to be qualified for the loan. However, lenders will also check your income, job stability, your property, existing obligations, and your credit history before sanctioning the loan. So, ensure that your credit score is high and your paycheck has seen a steady rise to better your chances.

Additional Read: How to qualify for loan against property

3. The type of property you can mortgage

As a loan against property is mortgaged against your property, you should also check your lender’s criteria when it comes to property. Usually this loan is sanctioned against both commercial and residential property. However, it is a good idea to check if your lender has other specifications. The Loan Against Property Interest Rates are lower in comparison to other loans so, one can easily opt for it. For example, some lenders may not accept vacant lots or agricultural land to be put up as collateral, while others may need your property to be insured before accepting it as security.

4. Loan amount available vs. your educational needs

Typically, a loan against property gives you funds worth 80% of the total value of the property you put up. So, ensure that you calculate how much you require for your child’s education plan how much you want to apply for. Let’s assume that the education expenses exceed what you have borrowed. In such cases, you can easily avail a top-up loan. As long as the value of your loans does not exceed 75% of the value of your property, you can borrow additional funds to finance your child’s future. If you cannot predict the exact amount you need, since the cost of tuition and housing can vary each year, you can also opt for a Flexi-loan Facility. This gives you a loan limit, which you can withdraw from as many times as you like. The advantage here is that you have access to maximum funds while paying interest only on what you use. Ensure that your lender has these provisions in place.

5. Application formalities and disbursal time

Keep in mind that since a loan against property is a secure loan, your lender may take some time to evaluate the property you are putting up as security. So, it is best to plan and ensure that you have enough time between the loan application and the tuition fee deadline. You can also choose a lender known to disburse these loans faster and more effectively. Another way to help hasten the process is by getting all the documents needed for the application ready beforehand. These may include the KYC documents, your IT returns, bank account statements, and a copy of your property papers. This will help your lender with the verification process. Bajaj Finserv has a hassle-free loan disbursal process with the fund getting deposited to your account within 72 hours* post-approval.

Additional Read: Loan against property vs education loan

6. Choosing the right tenor and evaluating the risk

Last but not least, be aware that choosing the right tenor can greatly impact your repayment. A shorter tenor leads to higher EMI but attracts the lowest interest. A longer tenor may reduce your EMIs but you might end up paying more as interest. So, understand these dynamics carefully and make a smart decision. Ensure that you are financially capable of repaying the loan and have other sources of income and investments to make timely EMI payments.

If you are looking for a loan against property to meet the expenses of higher education, look no further than Bajaj Finserv. Get great offers on loans at attractive interest rates.

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