There are plenty of loans in the market that offer quick finance for your needs. However, when you’re looking for a significant amount to pay for something expensive like higher education, you might want to narrow your search to a loan against property.
What is a Loan Against Property?
Loan against property is a type of secured loan, where you offer collateral for the amount you receive. As the name suggests, the loan is given against the mortgage of your home or property. Both banks and Non-Banking Financial Companies (NBFCs) offer this loan.
Taking a Loan Against Property for Higher Education
Loan against property for higher education has a number of benefits. For instance, property values are generally quite high. Thus, even if you get 50-70% of your property, you could stand a chance to get a high loan amount to fund your education fees, stay, and travel costs. Other than that loan against property interest rates are comparatively lower than most loans and they come with a long repayment tenor too. Both these factors benefit you when it comes to repaying the loan.
Furthermore, loan against property eligibility is also quite simple. Once you have your loan against property documents required ready, you could apply to banks and Non-Banking Financial Companies (NBFCs). Depending on the institution you ask, you could get your loan within a few days. With such ease and benefits involved, it does seem like a loan against property for higher education might be a good option. However, in addition to the eligibility criteria, you need to take the following precautionary measures too, to avoid rejection.
Apply for the Appropriate Loan Amount
The most significant criteria that determine your loan amount is the value of your property. Before you apply for a loan against property, you need to know the monetary worth of the property in question. A lender usually offers 50-70% of its value as your loan amount. So, ensure you calculate well and apply for the appropriate amount. For instance, if you need Rs. 50 lakhs but the estates market value is merely Rs. 30 lakhs that might create a problem during your application. The loan amount applied has to be lesser than the property’s value.
Opt for an Affordable EMI
As with all loans, a lender is usually concerned about your ability to repay the loan. For this, the mortgage loan approval will also depend on your monthly income. You have to consider your income and pick a suitable EMI and tenor. When you choose an EMI scheme, you’ll have to convince the lender that you draw enough income to take care of the monthly repayment comfortably. A responsible borrower is always careful about this factor, as your property could be at stake.
Also Read: Why Loan Against Property Gets Rejected?
Consider a Co-Applican
You might have the property, but if you do not have sufficient monthly income, your application might be rejected. To avoid this, you could rope in a co-applicant who makes up for your lack of income. A financially well-to-do co-applicant for a loan against property improves your chances of getting the loan approved.
Make sure the Property is not Disputable
If you are the sole owner of the property in question, you might not have major issues. However, if there are co-owners involved, you need to get everyone’s approval before you apply for a loan against property. If the property is disputable and the necessary documents are out-of-place, the loan could get rejected.
Maintain a Good Credit History
Bad credit history reflects negatively on your profile as a borrower. When you have a record of late payment of bills and loans or failure to repay other bills, it gives your lender an impression that you might be unreliable when it comes to repayment. Improve your credit history to avoid rejection for such causes.
Similarly, there is a bunch of other reasons why your application could be rejected. Checklist all the above factors before you apply for your loan against property to ensure it isn’t rejected. After all, this could be one of the ideal loans to fund higher education.