3 Reasons Why a Loan Against Property is Better Than a Student Loan.

A loan against property is not the first thing that comes to mind when you think of ways to finance a further education. However, if you are going to take a loan, you should look at all the possible alternatives and an LAP is definitely worth your consideration. In fact, an LAP holds an advantage over student loans in three areas, and this article will highlight them to ensure you make sound borrowing decisions.

1. Loan amounts.
Now though most student loan promise 100% financing, getting complete funding is not as straightforward as your think. Firstly, you need to be eligible for such an amount to get 100% financing without any terms and conditions. For this, you’ll either need to have an amazing academic record or a strong financial background. If you lack in any of these fields, you may be levied with higher interest rates or required to provide security to avail the loan.

However, with an LAP, you will get 60 to 70 percent of your property’s value as the loan amount. This should be more than enough to cover the cost an education.

2. Tenures of a loan against property.

How much time you are provided to repay the loan plays an important role in deciding how easy or difficult the repayment process is. With a student loan, you are provided up to 10 years to repay the loan. Out of which, you could choose not to make any payments till you’ve found the right job or the course comes to end, which will further reduce your tenure.

However, with an LAP, you can avail as many as 15 years to repay the loan. It not might seem like much but stretching your repayment by an additional 60 months results in much smaller EMIs.

3. Interest rates.

This is one of the most important factors to consider when comparing any sort of finance solution. With a student loan, you’d have to pay anything between 10 and 16 percent as the interest rate, depending on your merit and financial capacity.

However, with a loan against property, you could enjoy rates as low as 9.80% if your mortgage a residential property. The upper limit for an LAP is 11.55 percent, and this is the rate applicable for loan in excess of 1CR and when you mortgage a commercial property.

To sum-up, with a loan against property, you get higher loan amounts, more time to repay the loan and much lower interest rates. Together, these aspects will create for a great way to finance your education plans and a smooth borrowing experience. If you cannot decide between the two, it makes sense to consult a financial expert and check which one is better suited to your needs & financial status. We hope this article has been of use to you and that it helps you find the right finance solutions. Good luck and all the best, study hard!