Secured educational loans are those educational loans where the student attaches a ‘security’ against the education loan amount that he/she receives from the bank. The security, also called ‘collateral’, minimizes the risk for the bank. This security would be seized by the bank in case the borrower defaults on the loan. 

There are many possible security options that you can use to avail an educational loan:

  • Land property with house / flat: Firstly, banks give high preference to houses that have a concrete roof. Secondly, the property should also have an access road through which a car can easily approach. Moreover, the property/house should not have disputes with respect to the ownership.
  • Land property alone: Not all banks accept land property wihout a house/commercial building as security for education loans. For the banks that do, clear boundary demarkation of the land is required. Importantly, the land should be commercial land and should not be agricultural/environmentally disputed/land with multiple owners. Similarly preference is given to property with access road through which a car can easily approach.
  • Fixed Deposit: Banks look for an equal value of FD to be set against the required loan amount to sanction an educational loan. This approach has an added tax advantage too.  
  • Gold / Government Bond: An equal value of gold should be pledged to avail an educational loan. Just like an educational loan against Fixed Deposit, the advantage is that students get to enjoy the benefits of an education loan (like tax benefits, etc. details here). In case of government bond, the bond certificate is the only required document.

In the case of land property (with or without a house), the following set of documents are required to proceed with an educational loan:

Documents required for Secured Education Loan with Property / House

  1. Certified Copy of Main Deed.
  2. Encumbrance certificate (EC) of the property for the last 30 years.
  3. Latest Land Tax receipt & Building Tax Receipt.
  4. Latest Possession & Latest Location sketch.
  5. Prior deeds.
  6. Building Permit & Plan

Where do we get the documents for a secured education loan?

Obtaining the documents for a secured education loan in itself is a daunting task. However, knowing where to obtain the documents will definitely make life easier. In the following section, we will explore this in detail

  1. Main Deed/Title Deed: The title deed of the property/land is issued from the registrar/sub-registrar office in the name of the primary owner/owners
  2. Prior Deeds: Represents the previous ownership and transactional records of the land/property and can be obtained from the Taluk/Sub-registrar’s office
  3. Encumbrance certificate: An Encumbrance Certificate or EC is a certificate of assurance that the property in question is free from any legal or monetary liability such as a mortgage or an uncleared loan
    1. The encumbrance certificate for 15 years can be obtained from the sub-registrar’s office and the encumbrance certificate needed for 30 or more years can be obtained from the taluk office. The application for obtaining the same can be done from the sub-registrar’s office. 
    2. The application for the same can be initiated via your nearest Akshaya Kendra as well
  4. Land Tax Certificate/receipt: 
    1. The application for the same can be initiated via your nearest Akshaya Kendra as well
    2. Can be obtained from the village office in which the concerned property is located 
  5. Building plan and permit: Can be obtained from the concerned panchayat office in which the property is located 
  6. Possession and Location Certificate:
    1. The application for the same can be initiated via your nearest Akshaya Kendra as well
    2. Can be obtained from the village office in which the concerned property is located

Moreover, please note that there are certain advantages of availing of a secured educational loan, but it also comes with some cons. To understand the pros and cons of secured and education loans, check out our article here.  

At Cynapse, we work with major public & private sector banks that provide educational loans. We at Cynapse, understand the underwriting principles and processes that each partner bank. This knowledge hence helps us to guide students to ensure they have a tension-free time in availing of an educational loan. You can always reach out to us at contact@cynapse.co.in in case of any questions.