Saving money helps an individual cover unexpected expenses and meet family responsibilities. However, when it comes to funding a child’s education, it requires significant finances and careful planning. Apart from admission and tuition fees, higher education also entails additional expenses, such as food, boarding, study material, equipment, and other monthly payments.
One may take an education loan to fund the expense, but sometimes it is not that easy to procure. The loan amount may be insufficient, the interest rates might be high, or the government agency might not approve a particular course. At such times, applying for a LAP loan online may be a much better funding option. An individual who owns an asset can pledge it as collateral to a lending institution and take a loan against it. Let’s look at a few reasons that make a loan against property a good idea to fund a child’s education.
Understanding How a LAP Loan Works?
A LAP loan is a secured funding option where applicants can mortgage their property to borrow funds against its market value. A prospective borrower may apply for a LAP loan against any residential, commercial, or industrial property that is rented, unoccupied, or self-occupied.
After receiving a loan application, the lending institutions evaluate the pledged property’s market value and sanction a certain percentage as a loan. The property’s ownership remains with the lending institution until the borrower repays the loan amount along with the interest charges. If the borrower fails to repay the loan, the lending institution forecloses the collateral property and sells it to get their money back.
Reasons Why LAP Loan is a Good Idea to Fund a Child’s Education
- Easy Availability: NBFCs have made LAP loans extremely easy to avail. As long as the borrowers have the loan against property documents required, they may apply for a LAP loan. A salaried employee, self-employed professional, or SME owner can apply for a loan, provided they meet the lender’s eligibility requirements and have a good credit score.
- Generates a High Loan Amount: Many reputed NBFCs offer a hefty loan amount against a property pledged as a mortgage. An applicant may borrow as much as 70% of the property’s market value to fund a child’s higher education. Consequently, they can support all the education-related expenses using the loan amount without worrying about their finances.
- Lower Interest Rates: Since a loan against property is a secured loan, the borrower has a lower risk of default. Even if they default, the lending institutions have the security to get their money back. Consequently, they offer lower interest rates to borrowers compared to unsecured loans. However, the interest rates for a particular borrower may vary based on their income, credit history, employment history, property type, property location, and nature of work. Maintaining a healthy financial profile is handy for negotiating a better interest rate while applying for a loan.
- Comes with Flexible Repayment Options: Many fintech companies offer flexible repayment options with a LAP loan online. Borrowers can choose a repayment term with EMIs suitable to their monthly budget. They may opt for longer loan tenure to keep the EMIs small or choose a shorter loan term to repay the loan sooner and save money on the interest cost.
- No End-Use Restrictions: The lending institutions do not restrict the loan’s usage. Borrowers can use their LAP loan to fund education-related expenses, including tuition fees, admission fees, boarding and loading, food, monthly payments, study material, required equipment, student visas, etc.
- Eligibility for Diverse Property Types: Typically, any residential, commercial, or industrial property or plot of land is eligible for a LAP loan. Some lending institutions lend money against non-conventional properties like schools, guest houses, and farmhouses. However, ensure that the property’s title is clear and it should not have any pending litigation or encumbrance. Moreover, the chances are better if the property is well-maintained and insured.
- Faster Approval and Disbursal: Secured loans like LAP loans typically have faster disbursal rates than unsecured ones. Hence, those who require immediate funds to seek admission for their child can get quick funds against their property. However, it’s crucial to ensure that the loan against property documents required are in place to accelerate the loan process.
Every child deserves the best education. A lack of funds should never hinder their chance to excel in life. With a high-value LAP loan online, one can leverage their property’s equity and fund their child’s education in the best education institute. Undoubtedly, knowledge is the best gift one can give to their child. Check out the LAP section on a reputed lending institution’s website and apply for it today.