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Loan against Property: Here’s how you can use it to fund your child's higher education!

The news of your child’s acceptance to a prestigious university for higher studies is a moment of immense pride and joy. However, once the moment sinks in, you realise that you may need to arrange for large funds at quite a short notice. You definitely wouldn’t want to let your child down, especially as they are about to begin their journey to success. In such a situation, your hard-earned property could prove to be an asset.

A loan against property will help you secure funds for your child’s higher education through a quick and hassle-free process. Consult a reputed financial institution to understand how your property will help you meet the expenses of your child’s higher studies. A relationship manager can discuss with you in detail and offer you a mortgage with customised features and a wide range of benefits. Your hard-earned property could be the gateway to realising your dream of sending your child for higher education.

While applying for a property Loan, it is beneficial to know some mortgage fundamentals:

  • Principal - This is the total amount that the lender will grant with certainty. In most cases, 50-60% of the property’s market value is granted as principal. Depending on the applicant’s profile, it could stretch up to 70%.
  • Interest Rate - Interest rate refers to the cost of your principal. This is an important factor to look for as it determines the extra funds you would need to repay along with the principal. Interest rates for a such a mortgage could vary from 11-20% per annum (p.a.). However, with the right profile, you can negotiate and obtain a rate of even 9%.
  • Mortgage tenure - This refers to the period given to repay the principal and interest. In case of a loan against property, you could be granted tenure for as long as 15 years.
  • Equated Monthly Instalments (EMI) - An EMI is a convenient method that enables you to repay your mortgage. It is calculated by dividing the sum of principal and interest by the loan tenure.

To apply for a property loan, you would need to provide some documents along with the application form such as:

  • Recent photograph
  • Proof of identity, address and age
  • Bank statements
  • Form 16, Income Tax returns and pay-slips in case of salaried applicants
  • Proof of business existence, Company’s financials and Duly certified income tax returns (business and individual) in case of self-employed applicants
  • Copy of the Title Documents of the property and Approved Plan

Subject to the verification of your documents and application, your eligibility would be assessed primarily based on your repayment capacity. Repayment capacity is evaluated based on multiple factors such as the borrower’s income, spouse income, age, qualification, etc.

If you are considering a loan against property for higher education, do approach a financial institution that is widespread across the country and has an influential network of branches. Selecting an institution of good standing is important as they will be in possession of your property records and documents.

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