As much as 95% of students in India want to pursue their graduate or master’s programme from some of the top institutes abroad.
While there’s no doubt that they aspire to achieve their dreams, they also need necessary finance to fund a course overseas. Financial institutions today bring credit options like education loan that bridges the gap between a student and his/her dream career. You can use the loan amount to meet all your education-related expenses, be it travel tickets, cost of living, transportation, or any other cost.
However, although availing finances to fund education in India and abroad has become easier, you must consider a few things before applying for a loan against property for education.
5 Things You Must Consider Before Education Loan On Property Application
- The Applicable Interest Rates And Charges
Before applying, it is essential to know the education loan details like the applicable rate of interest and other charges as well as how a loan against property is processed. It is always wise to search the market and find a lender that offers this loan at the lowest interest rates.
Since the cost of loan also involves other fees and charges like processing fees, prepayment charges, etc., it is essential to look at these charges as well which may increase the total sum of expenses manifold.
- The Value Of Property To Be Mortgaged
Since education loan against property is a secured loan, you need to mortgage property against it to avail the loan. The amount you will be eligible for largely depends on the market value of the property to be mortgaged, which is decided by several factors like the property’s age, location, condition, type, etc.
Another factor that affects the amount that will be sanctioned to you is the loan to value (LTV) ratio determined by the lender. A high LTV means you will be eligible to avail a high-value loan amount. Some of the well-known financial institutions offer education loan against property with a high LTV of up to 75% of the property’s current market value. So, make sure to choose a lender whose policy regarding LTV maximises the loan amount.
- Required Eligibility Criteria You Need To Meet
Meeting the required eligibility criteria for education loan against property is the core requirement for application approval. Usually, a salaried employee needs to be an Indian resident between 25 and 70 years of age with a regular source of income.
For self-employed individuals, they need to be between 33 and 58 years employed with an MNC, a public sector or a private company.
Apart from these, your stability of income, credit history, current obligations, etc. will also be examined by your lender to decide the loan amount you are eligible for. Therefore, also make sure to check your credit score and income and take necessary steps to increase them for an improved chance of loan approval.
- Educational Needs And Available Loan Amount
Cost of living, lifestyle, expenses, etc. all add up to the tuition fees towards studying a course abroad or even anywhere else within India but away from the student’s place of residence. It is vital to plan out and keep to a specific budget. Doing so will help gauge the required loan amount. It will also help against availing beyond what is needed thus helping repay the total sum easily.
Since it is difficult to estimate the total cost of education, you may opt for a Flexi Loan facility from lenders like Bajaj Finserv. This facility allows you to withdraw the required amount when needed from the pre-sanctioned loan amount and pay interest only for that amount. With this, you will need to pay interest only on the withdrawn amount.
They also bring pre-approved offers that make the process of availing finance quick and easy. These offers are available on several financial products including secured credits like home loans, as well as unsecured credits like business loans and personal loans.
- The choice of tenure for loan repayment
The tenure you choose when availing an education loan on property has a considerable impact on loan repayment. A longer tenure means reduced EMIs that make repayment affordable. A shorter tenure will increase the EMIs but it will also help you repay the loan early and save on the total interest paid.
Select the right education loan in India and fund the entire expenses of your child’s overseas education. Calculate your monthly outflow with an education loan calculator and repay in easy EMIs while managing finances affordably.
Lenders like Bajaj Finserv bring an Education Loan on Property with flexible repayment tenure between 2 and 20 years. So, assess your sources of income and determine the ideal tenure of your loan against property accordingly.