Personal Loan

Loan Against Property Vs. Education Loan: Which One is Better For You?


As individuals, savings accounts typically serve a crucial purpose in our day-to-day lives and may be quite helpful in various situations. These funds are quite adaptable and may be used to satisfy a wide range of requirements, including those that were anticipated and those that came as a complete surprise. Despite this, certain obligations, such as paying for your child’s college education and a property loan, require additional aid regardless of the amount of money you have. One such commitment is paying for a wedding.

In most cases, this may be easily covered by applying for a student loan. However, there are situations in which getting a student loan is next to impossible. Some instances include:

  • Financial aid for attending a school or programme not approved by official authorities.
  • Over twenty million rupees were borrowed.
  • The anticipated return time frame is more than ten years.

Your immediate and future demands cannot be fully met with the funds from an education loan in any of the situations above. A loan against property (LAP) is the best option in this situation. To qualify for this loan, you must provide the bank with a mortgage on your house.

The bank will swiftly provide you with a loan against the property of 50 to 90% of the property’s value if it is unoccupied or used by the owner. Generally, a loan-to-value ratio of 40–55% is appropriate for rental properties. You may still receive this loan if you have an existing mortgage on the property by getting a “top-up” Loan Against the Property.

The benefits of a home equity loan for college expenses

You can get a big enough loan against property to cover all of your expenses without having to worry about falling behind on your regular payments or losing the house you currently live in. This might be possible if you apply for and are approved for a large enough loan against property to cover all of your expenses. If you were to use the equity in your house to make payments toward your child’s education, please kindly outline some of the most important benefits of this course of action.

Quick Recognisance

Authorization for a loan against property is easy to come by. All you need is the appropriate paperwork for your loan application. Since LAP is a secured loan, the lender’s loss potential is mitigated by the possibility that they may recoup their investment through the sale of the collateral. The rates of interest on these loans are rather reasonable. Because of this, it’s simpler to get than a student loan, which might be denied for reasons like the parent’s income being too low, the school not being authorised by the AICTE or UGC, a low CIBIL score, or a poor credit history.

Sum Borrowed Increasing

 You can acquire a larger loan amount through a loan against property in a shorter time than you would through a traditional educational loan, which has a maximum loan limit of Rs 20 lakh. It will be considerably simpler for your kids to attend a college or a university in the nation of their choosing if you borrow anything from 24 to 39% of your property’s market value, assuming that value is 60 lakhs.

Time allotted for further repayment

Most financial institutions stipulate that students must repay their college loan within 8–10 years of graduating. There may be other options, given how long it can take to locate good work. In addition, it may take more time than anticipated to get adequate remuneration to meet the conditions for repayment. Given that a loan against property has a longer amortisation term of up to 20 years, it eases the financial strain on your child.

Capacity for adjustment and use

The funds from a disbursed education loan are sometimes sent straight to the school. In contrast, with a Loan Against Property, you receive the dispersed monies outright and can put them to any purpose you choose. Consequently, if you need extra cash, you may easily subsidise your child’s living costs through LAP.

Constraints on What Kind of Schooling You Can Finance With Your Home Equity Loan

No tax benefits may be expected.

Although there are benefits to taking out a loan against property, you should be aware that you will not qualify for the tax breaks provided by Section 80E of the Internal Revenue Code for student loans.

Heightened Interest Obligation

Regarding Loan Against Property loans, interest payments start accruing as soon as the money is disbursed. However, for educational loans, you will not have to make any EMI payments for some time between six months and a year after the last day of your program.

After reading this, you should better understand how a loan against property may help you afford your child’s college education, and we hope you’ll take advantage of this low-cost financing option.

Can we use a student loan for house financing?

Don’t fret; the market is rife with several education loan possibilities. To secure a reduced interest rate and a longer repayment time on a student loan, collateral is typically required. To put it simply, a property loan is a loan for which collateral in the form of a piece of real estate is provided.

Loan against property, or loans secured by property, are mortgaged bank loans secured by a specific piece of real estate. This real estate might be anything from a residential residence to a plot of undeveloped land to a business building. The property’s market value, serving as collateral for the loan, is used to establish the loan amount approved under the loan against the property arrangement.


The home equity loan can be put toward college expenses. Students in India or anywhere else can apply for this loan to finance their postsecondary education. Bachelor’s and master’s degrees in business, engineering, and hospitality management are just some of the programmes that qualify for Loan Against Property funding. If you are interested in funding loans, visit Piramal Housing Finance for plenty of information.