{"id":23387,"date":"2023-08-28T12:03:19","date_gmt":"2023-08-28T12:03:19","guid":{"rendered":"https:\/\/www.tatacapital.com\/blog\/?p=23387"},"modified":"2026-01-27T13:08:15","modified_gmt":"2026-01-27T07:38:15","slug":"how-to-avail-an-education-loan-on-a-home-loan-property","status":"publish","type":"post","link":"https:\/\/www.tatacapital.com\/blog\/loan-for-education\/how-to-avail-an-education-loan-on-a-home-loan-property\/","title":{"rendered":"Education Loan Against Property: How It Works & Stepwise Guide"},"content":{"rendered":"\n

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A personal loan<\/a> for education is a smart way of financing a rewarding academic career. However, when you want to pursue a course in a premium institution, you may need to borrow a high loan amount to cover the costly tuition fees and additional charges. In such cases, you may use a secured education loan<\/a>. Here you\u2019ll pledge collateral against your loan<\/a>.<\/p>\n\n\n\n

An excellent collateral option for secured education loans is an immovable property that you own. Any residential property is acceptable, whether it is vacant or occupied by you or any tenants.<\/p>\n\n\n\n

But what if your property is under a home loan<\/a>? The good news is that you can still provide it as collateral for an education loan. Read this article to find out how.<\/p>\n\n\n\n

What is an Education Loan Against Property?<\/strong><\/h2>\n\n\n\n

An Education Loan Against Property  is a secure loan where a borrower takes out a loan against any property<\/a> that they own. The loan is then used to finance their educational expenses. The property, being used as collateral, can be a house, flat, or even a commercial unit. The market value of the property determines how much loan can be taken against it.<\/p>\n\n\n\n

Since the loan is secured, borrowers can receive higher funding compared to regular education loans. Education loans against property interest rates<\/a> are also usually lower than normal education loan interest rates. An Education Loan Against Property also comes with longer repayment tenures, making it suitable to fund expensive higher education, such as overseas studies.<\/p>\n\n\n\n

Benefits of Using Home\/Property to Fund Higher Education<\/strong><\/h2>\n\n\n\n

Using your home or property to finance your higher education can be a practical and cost-effective option. Some benefits of taking an education loan against property are mentioned below:<\/p>\n\n\n\n

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  1. Higher Loan Availability: Loans that are backed by property usually offer a larger amount, which makes them suitable for expensive education plans.<\/li>\n\n\n\n
  2. Longer Repayment Period: This type of education loan has longer tenures, which allows borrowers to repay comfortably over many years.<\/li>\n\n\n\n
  3. Lower Interest Costs: Since the loan is secured, education loans against property interest rates  are lower than other types of education loans, which makes overall repayment more affordable.<\/li>\n<\/ol>\n\n\n\n

    Property Valuation Requirements for Education Loan Against Property<\/strong><\/h2>\n\n\n\n

    If the market value of your property is high, lenders are more likely to approve your loan. They might also offer you a high loan amount and affordable personal loan interest rates.<\/p>\n\n\n\n

    Home loans typically have a long tenure, and since the property value appreciates over time, so the price of your house is likely to spike. Thus, you can apply for an education loan against the property easily. <\/p>\n\n\n\n

    Existing Loans, Repayment Track & Eligibility Assessment<\/strong><\/h2>\n\n\n\n

    While gauging your suitability as a loan candidate, lenders consider your fixed obligations to income ratio (FOIR)<\/a>. Ideally, your FOIR should be between 40-50%. Simply put, your monthly debt obligations<\/a> towards your loan shouldn\u2019t exceed 40-50%.<\/p>\n\n\n\n

    Besides, lenders check your repayment records. If you have made timely repayments against your home loan, your education loan approval will be faster.<\/p>\n\n\n\n

    However, if you\u2019ve taken the loan recently and have a sizeable amount pending, you\u2019ll be paying EMIs for a long time. So, lenders may not accept your property as collateral.<\/p>\n\n\n\n

    Interest Rates, Loan Amount & Tenure for Education Loan Against Property<\/strong><\/h2>\n\n\n\n

    An education loan against property is backed by an asset, allowing lenders to provide better terms compared to unsecured education loans.<\/p>\n\n\n\n

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    1. Interest Rates: Interest rates generally begin at about 8% per annum with public-sector banks, while private lenders may charge slightly higher rates. The presence of collateral helps keep borrowing costs lower.<\/li>\n\n\n\n
    2. Loan Amount: The loan amount depends largely on the property\u2019s current market value. Properties with higher valuations allow borrowers to access larger funds for education.<\/li>\n\n\n\n
    3. Tenure: Repayment periods typically range from 12 to 15 years, helping borrowers manage EMIs<\/a> comfortably.<\/li>\n<\/ol>\n\n\n\n

      Eligibility Criteria for Education Loan on Property in India<\/strong><\/h2>\n\n\n\n

      An education loan against property has certain eligibility conditions that can differ based on the borrower\u2019s employment type.<\/p>\n\n\n\n

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      Criteria<\/td>Self-Employed \/ Non-Professional Applicants<\/td>Salaried Applicants<\/td><\/tr>
      Age requirement<\/td>Must be at least 21 years old at application and not older than 65 years when the loan ends<\/td>Must fall within the age range of 18 to 60 years<\/td><\/tr>
      Income requirement<\/td>Should earn a minimum of \u20b91.80 lakh per year<\/td>Should earn at least \u20b940,000 per month<\/td><\/tr>
      Work or business condition<\/td>Business should have been running for at least 3 years with profits shown for the last 2 years<\/td>Graduation is required if working with a private company or partnership firm<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

      Required Documents for Education Loan Against Property<\/strong><\/h2>\n\n\n\n

      When you apply for an education loan on property, you must submit your property documents along with your identity proof, income proof, and address proof.<\/p>\n\n\n\n

      Generally, lenders request your property registration certificate, property tax receipts, and home loan documents as proof of ownership. Sort all the original documents before approaching the lender. <\/p>\n\n\n\n

      Research & Compare Lenders: Education Loan Against Property Rates<\/strong><\/h2>\n\n\n\n

      While you can take a personal loan for education under a home loan property, you must take both loans from the same lender. However, this might not always be the ideal option for you. <\/p>\n\n\n\n

      Suppose you have taken a home loan from Lender A, but Lender B offers you lower interest rates on education loans. Additionally, the Home loan rates & charges<\/a> are similar. How to get an education loan from Lender B in this case?<\/p>\n\n\n\n

      Well, you can shift your existing home loan to Lender B through home loan balance transfer<\/a>. Then, you can get an education loan from Lender B at preferential interest rates.<\/p>\n\n\n\n

      Key Risks & Things to Consider Before Using Home as Collateral<\/strong><\/h2>\n\n\n\n

      Using your home as collateral for an education loan can decrease interest rates, but it also has some risks, which are important to know before taking an education loan against property.<\/p>\n\n\n\n

      Some risks are mentioned below:<\/p>\n\n\n\n

      \u2022 Property can be taken by the lender if repayments are missed.
      \u2022 Long repayment periods may cause a strain on future finances.
      \u2022 Fluctuating income can make EMIs difficult to manage.
      \u2022 Legal and valuation costs add to overall expense.
      \u2022 Property remains tied up until the loan is fully repaid.<\/p>\n\n\n\n

      Step-by-Step Process: Education Loan Against Property in India<\/strong><\/h2>\n\n\n\n

      The process to take an education loan on home property is structured. It involves the following steps:<\/p>\n\n\n\n