Why is a loan against property a better way to finance your child's education
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Why is a loan against property a better way to finance your child's education

  • Highlights

  • High loan amount

  • Competitive interest rates

  • Quick disbursal of funds

  • Flexible tenor with low EMIs

According to an HSBC survey, parents in India spend about Rs.12.22 lakh onaverage, on education expenses of their child. As per data from the National Sample Survey Office, between 2008 and 2014, the average annual private expenses for general education increased by 175% to Rs.6,788 per student. Premier management institutions in the country such as the IIMs are in the process of hiking fees by 5-17% for the 2018-20 batch.

All these figures suggest that education costs will only get more expensive in the days to come and as a parent you need to have enough financial muscle to provide the best education to your child. One among the several financing options you have to fund your child’s education,is a Loan Against Property (LAP).

These are loans availed by keeping a residential or commercial property as collateral. The market value of the property determines the loan amount you will receive. Read on to know why loans against propertytick all the boxes to fund your child’s education.

1. High loan amount

You can get up to 70% of the value of your property as the loan amount. For example, Bajaj Finserv Loan Against Property offers salaried individuals a loan amount of up to Rs.1 crore.

On the other hand, self-employed individuals can avail a loan amount up to Rs.3.5 crore. This gives you ample funds to pay for your children’s tuition fees and other education-related costs such as hostel, books, and food expenses.

2. Affordable interest rates

Since loans against property are secured loans, their rates of interest are much lower than unsecured modes of financing such as personal loans. Lenders are more assured of repaymentdue to mortgaging of the property, thereby enabling lower interest rates.

What’s more, with certain loans against property like the one from Bajaj Finserv, you get a Flexi Hybrid featurethat allows you to borrow the amount you need from the loan limit and pay interest only on the amount utilized. Also, you get the option to pay interest-only EMIs.This effectively brings down the monthly EMIs and results in significant savings in the long-run.

3. Easy to avail

Loans against properties are easy to avail. Being a secured loan, the loan disbursal takes much less time compared to an unsecured loan. The entire process of loan application and disbursal of funds is quick and hassle-free.

For instance, for Bajaj Finserv’s Loan Against Property, the entire documentation and process is completed within 72 hours.Also, with pre-approved offers by Bajaj Finserv, there are no queues, no forms and no details required. Everything is already done for you. Discover your pre-approved offer here.

4. Longer tenor and lower EMIs

Loans against propertiesare long-term commitments with tenors ranging from 15-20 years. The long tenor reduces the monthly EMIs. Bajaj Finserv’s Loan Against Property, for example, allows you to choose tenors ranging between 2-20 years (salaried individuals), allowing you to repay the loan at your convenience. If you are self-employed, you can opt for a tenor up to 18 months.

Thus, it ensures the low monthly EMIs don’t impinge your other critical financial goals.

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