Secured education loan offers various benefits to students including lower interest rates, higher upper limit for sanctioned amounts, etc. The benefits of a secured loan are listed here for your reference.
In this article, we compare the various security options that you can use as collateral for your education loan to help you better judge the ideal collateral for your specific needs.
| Type | Pros | Cons | Approx Usable Value |
| Education Loan Against Property (Land) | An asset which is otherwise unutilised can be used to secure your education and lower your interest rates Most banks prefer a property with a house over baren/agricultural land. | Most banks might not accept land alone as collateral (Cynapse can help you identify the right bank for you). Furthermore, processing time can take between 20-45 days depending on the local branch/agency doing the legal and property evaluation. Banks usually won’t prefer lands where agricultural activity is present | Approx 80% of market value |
| Education Loan Against Property with House | An asset which is otherwise unutilised can be used to secure your education and lower your interest rates | Processing time can take between 20-45 days depending on the local branch/agency doing the legal and property evaluation | Approx 80% of market value |
| Education Loan Against Flat | An asset which is otherwise unutilised can be used to secure your education and lower your interest rates | If purchased within the last 3 years only the sale deed value is considered for evaluating collateral value. Processing time is higher due to legal verification | Approx 80% of market value |
| Education Loan Against Fixed Deposit (FD) | Faster processing time since no legal verification and evaluation is needed | 90%-95% | |
| Education Loan Against Gold | Faster processing time since no legal verification and evaluation is needed | 90%-95% | |
| Education Loan Against Government bond / LIC Policy | Faster processing time since no legal verification and evaluation is needed |
What if the house is already under a home loan? Can I get an education Loan against such property?
Yes, you can use the house that is already under a housing loan as collateral for your education loan. For this, the bank that is issuing the education loan will take into consideration the following factors:
- The current market value of the property
- Pending loan amount in the housing loan.
- Repaying capacity of the primary borrower (co-applicant)
- Existing CIBIL score of the applicants
To process this loan, the bank that is issuing the education loan will have to take over the housing loan from the previous bank. For such takeover cases, banks usually require an earning member from the student’s family as a co-applicant in addition to the housing loan.
Cynapse can help you take over your existing housing loans with the best-suited bank for your education loan needs.
Hope you found the article useful. Do check cynapse.co.in to know more about Cynapse and how to apply for an education loan. You can also write to contact@cynapse.co.in for clarifying your queries.
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