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Is Funding Your Child Education With a Loan Against Property a Good Idea?

2021-09-29
2 Min Read
Author - Neha Wadhwa
 Is Funding Your Child Education With a Loan Against Property a Good Idea?
392 views

Education spending in India has gone up very sharply, increasing the substantial financial burden on the households. Moreover, the rising costs in education have further made it extremely challenging for financially weak families to provide the best education to their children.

One of the several financing options that you can use to finance your education is a loan against property.

What is a Loan against Property?

A loan against property is a secured loan you can avail by mortgaging your residential or commercial property. You can avail the loan amount based on the property's market value.

Reasons why you should avail Loan against Property to finance your child education

  • High Loan Amount: The loan to value ratio for a loan against property differs by type of property. Banks and non-banking financial institutions provide loan amounts ranging from 40%-80% of the value of the property. In addition, the maximum amount with a mortgage loan that you can avail of depends on your employment status. Self-employed can avail a loan against the property of up to ₹ 3.5 crores. However, the maximum loan limit for salaried employees is ₹ one crore. Thus, you can avail ample funds to pay for various educational expenses for college, books, hostel, food expenses etc.
  • Lower Interest Rates: Another advantage of a loan against property is the affordable loan against property rates. As a loan against property is a secured loan, the rates are much lower when compared to unsecured loans such as personal loans . As per the current rates, you can avail of mortgage loans at rates starting at 6.90%. Along with the regular term loans, some banks and non-banking financial institutions also provide overdraft facilities against the property. You can thus borrow the amount when you need it and repay it as per your requirement.
  • Easy processing: As a loan against property is a secured loan, it is easy to avail of the loan without any rejection. You can apply for loan against property online or offline through various modes. These modes include visiting a bank's website or an online marketplace like MyLoanCare. In addition, you can also visit the bank branch or contact the bank customer care.
  • Longer Tenure: You can avail loan against property for a maximum tenure of 20 years. Thus, you can choose a longer tenure to reduce the monthly EMI on your loan. On the other hand, if you wish to reduce the interest outgo on your loan, you can opt for short tenures.

Bottom Line: Thus, if you own a property in your name or have someone who owns a property and is ready to avail loan against property with joint ownership, you can easily finance your child education.

About Author

Neha Wadhwa
Neha is a mass communication postgraduate. She works here as a senior Content Writer with a total work experience of 3 years. She loves to write on different genres mostly humour based lifestyle stories on trending real life topics.

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