Know How to Avail Education Loan on Property

Education Loan, one of the most popular types of personal loans in India, is getting costlier every year. This is because of the rising demand and importance of higher education. It, therefore, becomes important for parents to take an education loan for their children. This takes care of 2 main issues. Parents live the dream of their children studying abroad and at the same time, they do not reduce their savings kitty. This is how an education loan on property helps you in fulfilling life goals. Many times education loans are made available only after you get admission to the listed institutes, and lenders also evaluate the student’s academic records before granting the loan. Moreover, the loan amount might not cover other expenses that you may incur. Hence an education loan on property can fill these gaps and help you and your children achieve life dreams. However, before you go down that path, it would be advisable to collect all the relevant information for complete clarity.

Below is a list of preliminary work to do in order to avail education loan on property:

1) Property data
Loan against property is a simple process of borrowing funds on your property. This happens when you pledge your property as collateral. You need to start with getting an approximate value of your property. You can do that through a property consultant. This is an extremely important step as this determines how much loan amount you would get. Typically, loan on property is given as a percentage of the value of your property. Hence once you get an idea of your property value, you will get clarity on the estimated loan amount too.

2) Seeking loan and lender related details
The next step is to check your financial status and arrive at an amount that you are willing to pay as EMI on a monthly basis. A longer tenure leads to a lower EMI amount, and vice versa. You can use EMI calculators to receive the requisite transparency in your monthly outflow. This helps you plan your preferred loan tenure more efficiently by understanding your potential outflow and ensuring that you strike the right balance between saving interest payout Vs an EMI which can be easily managed within your budget. You should choose a lender who has a transparent and speedy process of loan approval and disbursal. The interest rate on loan against property is another important factor while deciding on your loan. Affordable interest rates on loan against property make it a reasonable prospect. You need to also check all the charges that are applicable on loan against property. Lenders usually charge a processing fee as a percentage of the loan amount. Over and above the processing fee, there would be some more charges towards the application and documentation. You need to know all the applicable charges before you apply for your loan.

3) Check eligibility
It is important to understand your eligibility for loan against property. There are specific eligibility criteria laid down by lenders based on which your eligibility towards loan against property is determined. This includes having a CIBIL score of at least 700, with a good credit history. Your eligibility will also depend on your your repayment history, regularity of income, existing commitments towards debt, etc. There are specific criteria laid down for salaried and self employed individuals too. The typical requirements for a salaried employee include being employed with MNCs, listed public ltd. cos., government organizations, private ltd cos., etc. As a self-employed, you need to be with a sole proprietorship, doctor, architect, CAs, partnership firms, private ltd cos., etc. To get an estimate of the maximum loan amount you can get for your property as well as your repayment capacity, you can use our loan to value calculator.

4) Making a list of documents
Lenders provide a straightforward list of documents that are required for loan against property. It would be a good idea to understand the list and gather the relevant documents and keep them ready with you. Salaried borrowers need to provide identity proof (PAN card, voter ID, driving license, employee card), income proof (salary slips, form 16, bank statements), and address proof (Aadhaar card, electricity bill, water bill, gas bill, ration card, property tax). Self-employed borrowers need to provide identity proof (PAN card, voter ID, driving license), income proof (IT returns, CA audited financials, bank statement), and address proof (Aadhar card, electricity bill, water bill, gas bill, ration card, property tax). Both types of applicants will also be asked to submit the documents pertaining to the property they want to pledge.

5) Apply online
Online application is the easiest way to apply for a loan against property. Such procedures are simple and easy to follow. Applying online gives you the comfort of being able to apply from anywhere, at any time. Typically, you need to start by confirming that you want to apply for the loan. Thereafter, you need to proceed to enter your basic details and your requirements. Representatives of the lender will get back to you to take your application further.

To summarise, availing education a loan on property becomes even easier if you do a thorough research on your financial status, potential lender, rates & charges, and the loan amount.

Must Read : Know the Basic Idea of Loan Against Property (Beginners Guide)