Education has become insanely expensive. A recent survey has revealed that private education from age 3 to 17 costs somewhere around Rs.30 Lakh and putting a child through private college requires one to spend upwards of Rs.1 Crore. Therefore, these days, new parents start investing in mutual funds and other high-return saving instruments with a horizon of at least 20 years. However, 20 years ago from today, parents did not have the option of mutual funds. Most individuals bought gold or real estate as a future investment. If your child is 18 and ready for college and you need money to fund their education, you can use the property you had invested in years ago to help you arrange the funds needed to put them through college. Loans against property, also known as property loans, are loans availed of against a residential or commercial property. This property serves as collateral or security for the loan. Loans against property have become a popular way of arranging money for property owners who wish to leverage property for education. Let us look at why loans against property have become a popular funding option for borrowers who need money to put a child through college.

Loans Against Property for Education: Features and Benefits 

1. Low-Interest Rates: Loans against property are secured in nature. These loans are secured by a collateral, i.e. a residential or commercial property. In case a borrower finds that they cannot repay their loan on time, the borrower can sell the pledged property for recovery of loan money. Thus, loans against property are zero-risk loans for lenders and therefore, lenders charge a low-interest rate on these loans. Low Interest rates on these loans make them affordable and easy to repay. 

2. High Loan Sanction: Borrowers can also avail themselves of a property education loan. However, the problem with education loans is that through these loans, one can get access to a maximum of Rs.25 to Rs.30 Lakh. More often than not, this money is not sufficient to put a child through college. Loans against property give borrowers access to a substantial amount. The LTV ratio for these loans can go up to 70%. In other words, borrowers can avail up to 70% of the pledged property’s value as a loan. 

3. Zero End-Use Restrictions: Yet another advantage of a loan against property is that the funds availed of under these loans come with zero end-use restrictions. Other than using the money to pay for a child’s education, borrowers can also use it to take care of a medical emergency, invest in real estate or other high-return avenues, start a new business, pay for a child’s wedding, etc. If you pay your loan EMIs on time, your lender will not concern themselves with how you are spending the money.

4. Long Repayment Tenor: Lastly, loans against property come with a long repayment tenor of 18 to 20 years. Such a long repayment tenor eases the burden of loan repayment and allows one to keep their EMIs economical.

Final Words 

If your child is ready for college, you must give them the education they need to survive in today’s high-competition environment. While one can always avail of an education loan to help with the education expenses of a child, education loans have their shortcomings. If you own a property, residential or commercial, you can avail yourself of a loan against the property. These loans offer many benefits and are as safe as any other loan option.

Read Also:- Determine Your Loan-to-Value Ratio with LTV Calculator