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Education Loan Against Property for Studying Abroad

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By:CANAM Group
Updated On:May 28,2024 05:31 PM IST

Loan against property for education abroad offers benefits in terms of tenure, interest rates and more.
Such loans are offered by public & private banks and NBFCs.
Eligibility criteria for such loans are the basic requirements to apply for a loan, but the loan amount, interest rate and tenure is decided by the lending institutes based on factors like value of property, income, etc.

Education loan against property.webp

Planning for studying abroad cannot be complete without considering an education loan. An education loan covers expenses like travelling to the destination country, tuition fees, living expenses, and more. All the Loan options may differ in terms of the amount borrowed, loan tenure, and conditions. Loans up to a certain amount are offered without collateral, whereas for higher amounts, liquid or fixed collateral like property is required.

This blog will cover the details of eligibility, documents, lending institutes, and repayment conditions for an education loan secured by immovable collateral such as property.

What is an Education Loan Against Property?

Generally, lending institutes offer education loans for prospective students willing to study abroad without collateral. This works in case the loan amount is limited to a specified lakhs as offered by the lending institute. But if the loan amount is greater than the set amount for an education loan, collateral may be needed. To get a higher amount for all education expenses to study at a higher education institute in a different country, a loan against collateral can be opted.

A loan against collateral can be of two types:

with movable collateral like a fixed deposit or bond
with immovable collateral like a flat, house, bungalow, or non-agricultural land.

A loan against property can be used for various purposes; however, its use for international education falls under the category of loan for personal use.

Why take an Education Loan Against Property?

Admission to international institutes requires funds for tuition fees and additional costs like those for travel, examination, studying materials, equipment and more. There may be cases when the total calculated cost is more than the loan amount offered by the lender without collateral. In those cases, students can opt for a loan against property to borrow the required loan amount. There are many other reasons for which a loan against property is required. Below are those reasons:

Higher loan amount - A loan amount offered against collateral (Property) is higher, so depending on the program and living costs in the chosen country, the requirement can be fulfilled with a higher amount. This can be accessed with a loan against property.

University acceptance not required - A loan against property does not require an acceptance letter from the university. So, it becomes a quick solution for those who know that one of the candidate’s applications (to an international institute) will be successful.

Interest rates differ from those of an education loan - Since collateral is involved, the interest rates are more attractive than those of a loan without collateral. The minimum interest rate for a loan against property is 8.4%*, as opposed to a minimum of 9.95% for an education loan without collateral.

Criteria	Education Loan without Collateral	Education Loan Against Property
Loan Amount	Public Banks - Up to 7.5 Lakhs Private Banks - Up to 40 Lakhs NBFCs - Up to 40 Lakhs	Up to Rs.10 Crore (some loans may go up to 25 crore)
University Acceptance	Required	Not Required
Maximum Interest Rates	9.95 %	8.4 %
Maximum Loan Tenure	15 Years	20 Years

Longer loan tenure -The maximum tenure for a loan against property is longer. The maximum loan tenure for an education loan is 12-14 years, while that of a loan against property is 20-25 years, depending on the lending institute.

*interest rates observed on 2nd March 2024 and may differ with specific bank conditions.

Lending Institutes for Education Loan Against Property

Three types of lending institutes offer higher amounts (collateral-based) loans against property. They are listed below, along with their interest rates and loan tenure.

Government banks
Private banks
Non-banking financial corporations.

Government Banks

The main aspects of loans against property for abroad studies are given in the table below.

Lending Institute	Maximum Loan Amount	Interest Rate	Maximum Loan Tenure
SBI Bank	Rs. 5 crore	1.45% to 2.5% + 1yr Marginal Cost of Funds-based Lending Rate (MCLR)	15 years
Union Bank	Rs. 10 crore	10.45% - 13.10%	15 years
Punjab National Bank	Up to 65% of property value	9.20% - 9.70% p.a.	15 years
Canara Bank	Rs. 7.5 crore	10.85% - 11.35%	15 years
Bank of India	Rs. 7.5 crore	11.25% per lakh	15 years

Private Banks

The main features of a loan against property for international education are given as under:

Lending Institute	Maximum Loan Amount	Interest Rate	Maximum Loan Tenure
Axis Bank	Rs. 5 crore	10.50% - 10.95%	20 years
ICICI Bank	Rs. 5 crore	10.85% - 12.5%	15 years
HDFC Bank	Up to 65% of property value	9.50% - 13.30%	15 years
Indusind Bank	up to 80% of property value	8.90% - 13.90%	20 years
Kotak Mahindra Bank	Rs. 5 crore	Starts at 9.15%	5 years
Citi Bank	Rs. 5 crore	10.50% - 10.95% p.a.	15 years
IDBI Bank	Rs. 10 crore	9.5% - 11.70%	15 years
IDFC First Bank	Rs. 10 crore	9% - 20%	25 years

Non-banking Financial Institutions (NBFCs)

Education Loan offerings by NBFCs for studying abroad with their salient features are listed as under.

Lending Institute	Maximum Loan Amount	Interest Rate	Maximum Loan Tenure
Tata Capital	Rs. 7.5 Crore	Starts at 10.10%	20 years
Bajaj Finserv	Rs. 10.5 crore	8% - 14%	15 years
Mahindra Finance	Rs. 25 lakh	6% - 26%	5 years

NOTE: Interest rates and other details mentioned in the table depend on the value of the property mortgaged and a range of other factors; rates mentioned here may vary.

Education Loan against Property Eligibility

An Education Loan against property for admission to international universities and colleges is a secured loan. There are specifications for age, employment status and salary for the borrower to apply for this loan type. The eligibility criteria for loans against property may differ with the lending institute, but the general criteria are given in the infographic below.

Lending institutes evaluate income stability and debt-to-income ratio for sanctioning the loan to ensure the borrower is able to afford mortgage payments.

Documents List for Education Loan Against Property

The application for a loan against property for studying abroad proceeds with the compilation of all required documents. The document needs may vary with the lending institution, but all institutions require proof of identity, funds, and source of funds with the documentation of the pledged property. Common documents required to apply for a loan against property for foreign education are given below.

Proof of residence in the form of Ration Card, Telephone Bill, Electricity Bill, or Voter’s ID Card
Proof of identity in the form of Voter’s ID Card, or Employer’s Card
Bank statement of the past six months
Salary slip or documents showing deductions for the past six months (if applicable)
Business profile documents (if applicable)
Form 16 (TDS deductions) for the previous 2 years
Documents of concerned property to be pledged for the loan
Passport-size photographs

How to Apply for a Loan Against Property?

Students and guardians can apply for a loan against property with the guidance of expert loan advisors at leading international education consultancies. The procedure for applying for a loan for international education is described below.

Consult the international education advisor who helped with the admission process for suitable loan options. This includes checking for eligibility, amount, interest rate and other factors important to you.
Select a loan option that best suits you.
Download the application form and fill in the details (with the guidance of the international education expert)
Submit the form with copies of the required documents
Wait for application processing and approval

Conclusion

Loans against property for international education are offered by different types of lending institutes, including government & private banks and NBFCs. The loan is different from an education loan in terms of the amount it offers, interest rates and more. Each loan product has its own specifications of maximum loan amount, interest rates, tenure and other features.

Receive admission and loan guidance from study abroad experts at Canam Consultants to pursue education in countries across North America, Europe and Australia.

FAQ

What is the minimum CIBIL score required to get loan against property for international education?

A minimum CIBIL score of around 700 can be considered eligible for getting a loan against property. However, the eligibility requirement may vary as per the specifications of loan at every lending institution.

Can agricultural land be pledged as collateral for a loan?

Agricultural land loans may allow borrowers to secure a loan against it for personal needs such as international education. The specific features and details should be checked with international education advisors.

Can commercial property be used as mortgage for a loan for studying abroad?

Yes commercial property can be mortgaged for a loan for international education. However, the rates of interest for different property types vary. For example, a residential property offers better mortgage loan interest rate than a commercial property.

Is there a tax benefit for loan against property for international education?

There is no tax benefit for using the loan for personal benefit such as international education.

What can be pledged as collateral for loan against property for international education?

Apart from residential and commercial properties, liquid assets like government securities, bonds, insurances and fixed deposits etc. can be pledged as collateral for a loan.

What is the maximum amount one can receive for a loan against property?

The maximum amount a borrower can gain for a loan against property is Rs.10 crore* or 80% of the value of the property.

The amounts have been observed for certain banks on 2nd March, 2024. Maximum loan amounts may vary as per bank specifications upon application.

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Education Loan Against Property for Studying Abroad

Table of Contents

What is an Education Loan Against Property?

Why take an Education Loan Against Property?

Lending Institutes for Education Loan Against Property

Government Banks

Private Banks

Non-banking Financial Institutions (NBFCs)

Education Loan against Property Eligibility

Documents List for Education Loan Against Property

How to Apply for a Loan Against Property?

Conclusion

FAQ

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Griffith University - Nathan Campus Queensland

La Trobe University - Bendigo Campus Victoria

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