How a Loan Against Property Helped Raghu Finance his Child’s Education
There are some instances in life when we are faced with certain financial obligations, but don’t have the necessary means to fulfil them all. Such was the case with Raghu from Bhopal. His salary of 75,000 was only enough to meet the day-to-day needs of his four-member family. Never in his dream could he ever imagine to fulfil any extravagant desires with the modest income. Hence, when it came to financing his talented son’s Rahul education in Australia, the only way out that Raghu could think of, was an educational loan. However, his plans and dream were shattered, when he came to realise that most banks have a cap of 20 Lakhs on educational loans.
He knew that Rahul was more than just excited regarding the prospect of kick-starting his journey towards becoming an exemplary Aero-Space Engineer. For no reason on earth was Raghu prepared to break his son’s heart. He was discussing this all with his colleague when his superior overheard the conversation and dropped in to offer friendly advice.
He suggested that Raghu should Apply for a Loan Against Property. He further explained that Raghu could pledge any residential, commercial or industrial nature that he owns as collateral, and get a credit worth 50-90% of the market value of the property. Thinking about the plot of land that his mother left him, Raghu jumped at the prospect. When he enquired about the value of the property in the market, he was suggested that the property was easily worth 60 Lakhs.
Since Raghu had a reasonably good credit score of 600 (as he took a small Personal Loan in the past and repaid it successfully), the online lender he approached conveniently accepted his loan application, and disbursed an amount of 30 Lakhs, at an interest rate of 10%. Considering his current financial condition, and his child’s plans, Raghu opted for tenure of 15 years, under which he could efficiently manage to pay EMIs for a few years until his son found a job.
Now isn’t that a great way to meet your financial needs! If you happen to be new to the concept of Loan Against Property, here is everything that this loan entails. It is at such times that Loan Against Property come to our rescue. To procure this loan, the borrowers must mortgage their property as collateral to the lender. This type of loan is usually taken to meet the monetary requirements for the following purposes:
- Renovation of home
- Personal purposes such as marriage, education, others
- Purchase of a new property
- Setting up a new business
- Expansion of an existing business
- For immediate working capital requirement
- Purchase of machinery
The property given in as collateral must be owned by the borrower and should be either of residential, commercial or industrial nature. Loan Against Property is preferred by a vast majority of people for more than just one reason. These include:
- Long repayment term
- Low-interest rates
- Flexibility to use the funds for various purposes
Given its significance, it is only just that you take the time and diligence to find a lender who you can rely on, and offers you an attractive proposition. One of the most compelling aspects of such a loan is that it can be taken against a vacant as well as rented property. The difference here is that the Loan to Value Ration for a vacant property is as high as 50-65%, while that for a leased property is slightly lower at 40-55%.
For what it’s worth, this type of loan is an incredible option that provides you with a financial buffer against unexpected expenses at any given point in life. You can pledge residential/commercial property or a plot of land at its prevailing market value to avail funding from a bank. You can get an approval for a Loan Against Property rather easily. All you need is the requisite documents, and you can go ahead to file your application. Since it is a secured loan, the lender is at a lower risk and can recover the amount by selling off the property pledged as collateral. This ensures that the loan is offered at a lower interest rate. This makes it easier to obtain, as compared to educational loan, which may be declined due to an array of reasons including:
- Low income of the parent
- College/University not approved by AICTE/UGC
- Bad credit score or credit history
So, like Raghu, if you too wish to accomplish your dreams or that of your child, wait no more before you seek the assistance of an online lender and opt for a loan against property. After all, your dreams are too extraordinary to wait!
Also Read: Loan Against Property vs. Personal Loans
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