4 Important Things One Must Know About Education Loan On Property

While India’s GER is at an all-time high of 25.2% for FY 2017-18, it is expected to grow to 30% by FY 2020-21. A growing GER reflects the recent trend of pursuing higher education in India and abroad from 24.5% in 2015 -16 to 25.8% in 2017-18. However, the increasing cost of education at an annual rate of 10-12% poses a significant hurdle.

Under such circumstances, the Government of India launched education loan subsidy schemes like the Central Sector Interest Subsidy Scheme (CSIS), 2009 and Padho Pardesh Central Scheme of Interest Subsidy for Minorities.

These schemes aim to assist each student in pursuing their education irrespective of their financial constraints via subsidies which reduce total repayment burden. However, a significant issue to availing government education schemes is providing adequate funding to finance additional expenses to pursue higher studies in India and abroad. Thanks to the education loan offered by various leading NBFCs that come with a high-value loan amount, borrowers can now meet the diverse financial expenses incurred while pursuing education.

Check out these crucial things that one must know about the education loan against the property before applying for one –

• Cost of loan

The application and processing of a loan often incur charges that lenders do not specify while one applies for a loan. However, in the case of reputed lenders like Bajaj Finserv, availing their Loan Against Property for Education provides individuals with transparency about the cumulative cost of a loan that includes –

1. Processing fee
2. Transaction statement amount
3. Foreclosure charges
4. Part prepayment fees

An in-depth idea about how a loan against property is processed and the expenses involved in its processing helps avoid any unforeseen expenditures that might affect their monthly budget.

Additionally, this reputed lender also offers multiple other beneficial features like the Flexi Hybrid feature. With this, borrowers can utilize funds from a pre-sanctioned credit amount and pay interest only on the withdrawn amount.

Bajaj Finserv also brings you pre-approved offers on numerous financial products that include both secured advances like home loans, and unsecured advances like personal credit, business loans, etc. These offers make the application process to avail such finances easy and quick. You can take a look at your pre-approved offer by providing a few essential details like your name and contact number.

• Various Education Loan Subsidies

Borrowers can opt to apply for multiple education loan subsidy schemes that help students conveniently repay the loan availed. Such schemes come with numerous features and benefits like –

1. Reimbursement of additional expenses and processing charges of a loan
2. Concession of the rate of interest charged by financial institutions
3. Interest rate subsidy on education loan for the moratorium period (course of 6 to 12 months during which the Government bears the interest payable. Following this period, the borrower pays interest on the outstanding loan amount. It is in accordance with the Model Educational Loan Scheme and is subjected to change with time.)
4. Discount on the interest paid during the repayment of the loan, etc.

Under such schemes, a considerable reduction in the rate of interest results in the subsequent mitigation of EMIs (considering that EMIs are the consolidated sum of principal and interest sum). In this education loan interest subsidy reimbursement scheme, the interest amount paid across the loan is refunded.

• Eligible Loan Amounts

Borrowers should avail an eligibility calculator offered by reputed lenders and look into the loan amount that they are eligible for. It requires individuals to provide their monthly income, a preferred tenor, and their existing monthly financial obligations.

Following this, a potential borrower can mortgage an asset of high market value, furnish the required documents, follow the hassle-free application process, and meet essential eligibility criteria to qualify for a loan against property.  

• Tax Benefits

Availing education loan subsidy also enables borrowers to gain access to various tax benefits under Section 80E of the Income Tax Act. Under this act, the interest paid on education loan can be claimed for tax exemptions. There is no upper limit of the Interest rate subsidy on education loan in case the sum availed is used to fund expenses incurred in pursuing higher studies.

Such subsidies are advantageous when it comes to repaying hefty credit amounts involved in such secured advances. Must use the online tool Education Loan Calculator to calculate the amount you have to pay. It only requires the information of loan amount, tenure and rate of interest. Considering that this amount comes with no end-usage restriction, this sanctioned sum can thus be used to meet various financial requirements of a borrower. Loans against properties are arguably the most beneficial financial product which helps students continue with higher education sans any financial constraints.