3 reasons why a loan against property is better than a student loan.

Like most other things these days, the cost of education too is sky-rocketing. In fact, pursuing an education overseas or going in for an executive course such as MBA is something not all of us can afford solely on savings and our incomes. This is when reaching out for financial aid is probably your best option.

In such a scenario, most students opt for an education loan and though these loans are designed keeping in mind the needs of young aspirants, there is another alternative that’s worth considering and it’s called a loan against property. And to help you make a better-informed choice between the two, this article will highlight 3 major reasons why taking a loan against home or property is better than opting for a study loan.

1. A loan against property comes with better interest rates.
Probably one of the biggest things you want to look at when selecting a financial aid is the cost at which it is made available to you, in short, the interest rate applicable. Generally speaking, student loans come with interest rates ranging between 10 and 16 percent.

However, if you were to opt for a loan against property, you could enjoy significantly lower interest rates and better savings. This is because most lenders will provide you interest rates ranging between 9.50 and 11.60 percent per annum on a loan against property.

2. Longer tenures.
The tenures of a loan go a long way in deciding just how stressful or smooth your repayment journey is. Longer tenures mean smaller EMIs and easier repayments whereas as shorter tenures invite much higher EMIs and strenuous repayments.

With a student loan, you’d have a maximum of 10 years to repay your loan. However, with a loan against property, you can expect as much as 15 years to repay your loan amount. This means your EMIs will be spread across an additional 60 months resulting in much smaller EMIs.

You can even cut short the tenures by prepaying the loan as and when you are financially able to do so. This means you handle your repayment on terms you are more comfortable with.

3. Better funding.
Most lenders will provide you as much as 60 percent of your property’s value as the loan amount. This could work-up to quite a considerable amount of money considering the value of property these days. Availing similar loan amount through a student loan could require you to provide some collateral, probably in the form of life insurance or fixed deposits.

The only advantage a student loan has a loan against property is the moratorium period wherein you do not need to make any payments till you pass out or find a job, whichever is earlier. However, you must note that, even though you do not have to make any payments, simple interest will still be calculated during this period and this will be added to your principal amount.

So if you are in need of funds to pursue your further education plans, you should consider a loan against property. It’s a more affordable option that provides you the funding you need along with much easier repayments.