Overseas education continues to be an attractive proposition for undergraduate and postgraduate students. However, international universities are expensive and financial higher studies can prove to be tough, in the absence of scholarships. But your child’s future career is not something you want to compromise on. So, what to do?
Here is a solution.
If you have a home or any property in your name, you can opt for a mortgage loan from a lender. Such a loan is called a loan against property.
What Is Loan Against Property?
Loan against property (LAP) is a loan paid against the mortgage of some property. The property you mortgage can be a flat, a house, or even just a piece of land in your name. The loan amount disbursed to you depends on the property’s market value at the time.
Why Opt For LAP To Fund Studies Abroad?
A LAP comes with minimal restrictions, and you can use the substantial sum as you deem fit. When you compare LAP against other types of loans like a personal or education loan, features of a LAP make it best suited to finance higher studies.
Lower Interest Rate
Since you offer property as collateral to avail a LAP, the rate of mortgage loan interest is generally lower, compared to any other unsecured loan. Interest rates for a loan against property range typically between 9% and 12%.
Minimal To No Prepayment Charges
Whenever you can afford to pay more than you EMI pre-fixed amount, we’d suggest making prepayments towards your loan. This reduces the debt burden on you and gets the loan to finish faster. Unlike other loans, lenders generally charge minimal to no prepayment charges in case of loan against property.
Easy To Avail
Because it is a secured loan, a LAP is easier to avail. Lenders prefer offering these loans to individuals since there are fewer chances of someone to default on them.
LAP tenures are available for longer tenures. They can go up to 15-20 years, depending upon the loan amount and the EMI you settle on. When compared to personal or education loans that have tenures going up to only 5-7 years, LAP can really help manage the loan burden and give you ample time to repay the amount.
There is an inverse relationship between tenure and EMI. The longer the tenure you choose, the lower your EMI will be and vice versa. Lower EMIs proves suitable for people who are unable to afford to pay higher EMI amounts. However, before you decide anything, keep in mind that a shorter tenure would mean the interest burden on you will be lower.
Easy Eligibility Terms
Unlike education loans that demand outstanding academic performance and admission to a job-oriented course, a loan against property comes with simpler eligibility terms. The basic terms to be eligible for a loan against property at PNB Housing are:
- Salaried of self-employed
- Age should not be more than 60 for salaried and 65 for self-employed applicants
Lenders take into consideration many factors like your income, age, spouse’s income, and the value of the property you want to mortgage to decide on your loan amount. With everything right, you can get a loan of up to 60% of the value of the property to finance higher studies abroad.