Should Parents opt for loans against property for their child's higher education?
Child higher education is an essential part of modern society. It is a significant investment for our children's future and their long-term development. However, it is challenging to educate kids in the modern world. The cost of education has risen dramatically. For a secure future, it has become almost necessary for one to have a higher education degree. And hence the need for parents to fund their child’s higher education.
The news of a child's acceptance into a university is a pride moment for any parent. But only some parents are financially capable of sending their child to the most expensive universities, and this is where Loans against Property come in handy.
Loans against property are an excellent solution for parents looking to fund their child's higher education studies. A loan against property is a secured loan where parents can get more than half of the loaned property value as a mortgage loan
amount, with no strings attached. That's right; the borrower can use the money how they see fit, including paying for their child's higher education.
Here are the benefits of parents opting for loans against property to fund their child's higher education:
1. Quick Solution to the funding issue
The most significant advantage of getting a loan against a property is how quick the process is for the users. Unlike personal loans or any other loan scheme that one might find in the market, a loan against property has a quick approval rate, primarily due to the substantial capital against which the loan is being sanctioned.
The loan application will likely get approved within a week or so. The applicant is only required to submit essential documents at the time of the application, and that's it. It is a quick solution when one needs money fast.
2. One can apply for a higher loan amount.
Compared to personal loans, where the credit score and the applicant's income are the significant considerations for any loan application, in a loan against property, the property value plays that central role. It allows the parents to borrow significantly more than what any personal loan lender would have offered them. It is something that is especially helpful as the cost of educating your child includes much more than just tuition fees.
3. Low-Interest Rates
Education loans are also an option that one can consider to finance their child's higher education. However, the interest rates that come with the loan against property might be an issue that might tempt one to get back to the loans against property.
Loans against property have significantly lower interest rates than education loans and even personal loans
with no strings attached. It makes them an attractive option for parents that are looking to fund their child’s higher education.
Loan Against property – better than educational loan
Education loans are an excellent way to help students pay for their education. However, they have the potential to be very bad for the students. They can turn into a debt trap and cause them to miss out on opportunities that could have helped them succeed in life. They are also a financial burden that the students, who have just passed out from college, would rather avoid.
A loan against property would allow parents to fund their child's higher education and ensure a successful and burdenless future.
Getting an educational loan is also a difficult task, another area where Loan against Property excels at.
What do you need to get a loan against property for your child's higher education?
We have already mentioned the seamless and straightforward method for a property owner to fund their child's higher education. Here are the documents that you need to attach at the time of submitting your application.
• Salary slips for a period of no less than three months
• Bank statements of all bank account for a period of no less than three months
• Aadhar Card/ PAN Card
• Proof of Address of the applicant
• Property papers confirming the ownership of the property
• Recent passport-size photograph of the applicant
• Income Tax returns for the last 3 FYs
• Business proof, in case the individual owns a business or is self-employed. A company registration document would do.
These documents would be requested by the lending institution and would determine the rate of interest and the period of loan repayment offered to the borrower.
Terms you should know before getting a Loan against Property.
Principal: The principal on the loan is the amount that the lender has set for all of the property's equity. The loan amount will depend on a number of factors, including the property's age, how much equity and more.
Interest Rate: The interest rate is the interest the lender would charge on capital. The interest rate will determine the extra amount the individual has to pay for borrowing.
Mortgage Tenure: It is the period for which the lending institution has sanctioned the loan.
EMI or Equated Monthly Instalment: EMI is the amount the lender would have to pay to the lender on a monthly basis to ensure that their loaned amount is paid back in full and on time.