Education, today, has become a costly affair, especially if your child is planning to study abroad. Tuition fee may start from Rs. 10 lakhs for certain courses in India and arranging for liquid funds for such a hefty amount may not be easy. Apart from this, there are overheads such as hostel fees, canteen, books and other equipment. If your child opts studying abroad, the total cost may go to almost 50 lakhs with an additional fees for visa application and travel expenses.In such cases, your property is mostly the most valuable asset which can come handy for generating funds.
Here is why
Loan Against Property can be helpful for supporting your child's education
- Can generate a high amount of loan as banks lend 50 to 60% of value of property
Most financial institutions offer a hefty amount of loan when it comes to property as a mortgage. As much as 50% to 60% of the market value of the property is funded by the lending institution. Some lending companies also finance as much as 70% of the market value of the property.
Also Read: Why is Loan against Property the preferred choice of Businesses? - Loans come with flexible options
Many fintech companies and other non traditional financial institutions offer flexi-options when it comes with LAP. Disbursements on interval basis, offer to opt for enhancement of loan, flexibility in EMIs, ability to extend the tenure, etc. are some of the flexible options that lenders may offer.
- Since your property is used as a mortgage, it attracts lower rate of interest
If you are seeking a loan at a
lower rate of interest, LAP is an apt solution. However, your rate of interest will also be influenced by other factors such as
- Your credit history
- Employment history
- Salary/Income
- Type of property
- Nature of work
Choose a lender who offers fair
value of your property and favorable rate of interest in relation to your portfolio. This is where a healthy financial history comes handy for negotiating a better rate of interest.
Also Read: Resolve Financial Emergencies with a Loan Against Property - Easy to avail since it is a secured loan
Most traditional as well as non traditional financial institutions are willing to provide an LAP simply because property is an attractive asset in financial terms. Hence, this type of loan is more beneficial.
Typically, the duration of repayment of a LAP goes up to 15 years. This allows you enough time to comfortably pay off the EMIs.
Since LAP is a
secured loan, disbursal is typically faster. Hence, if you are in immediate need of funds for seeking admission for your child, then you can apply for an LAP. However, ensure that your property and related documents are in place if you need to seek funds on a fast-track basis.
- Better option than education loan
While filling out the loan against property application form, you may wonder if education loan is a better option.
Education loan Vs LAP
Education loan is a
personal loan, hence, attracts a higher rate of interest. Property is a valuable asset in terms of market value. So, the chances of getting an LAP approved are higher. In short, if you have a property, it is recommended to raise funds against it.
Also Read: Rules To Follow While Taking A Loan Against Property Final Thoughts
Typically, your residential or
commercial property, plot of land is eligible property for loan. However, these days, non conventional assets such as farm houses, guest houses, schools, etc. are also eligible for loan. However, ensure that the title of the property in question is clear and there is no encumbrance or litigation pending on the asset whatsoever. Additionally, your property must also be insured and well-maintained.
