Introducing Top-up Loans for Students Taking Overseas Education Loans


Getting education loans for studying abroad is a huge task for the parents and the student. Loans that are disbursed against collateral, also known as secured education loans have the following benefits; a. A lower interest rate than unsecured loans and, b. The lender institution disburses a higher amount.
However, there may be certain issues faced by borrowers regarding the collateral that is mortgaged. In this article, we seek to introduce the concept of top-up loans and how they help borrowers in the process of getting Student Loans for Studying Abroad. The article also explores various alternative options of top-up loans that may be utilized by prospective borrowers.

 What is a Top-Up Loan?
A top-up loan is of immense benefit to borrowers with a single asset acting as collateral, and the requirement of multiple loans. A top-up loan may be explained with the following example. Suppose Mr. X has a bungalow worth INR 95 lakh which he has used as collateral to fund his son’s Bachelor’s degree from a private engineering institution. The Loan amount that Mr. X applied for was INR 10 Lakh which was disbursed against the bungalow mentioned above. After completing his Bachelor’s degree, the son decides to go overseas to pursue MS in Robotics at a premier institution in the US. For the purpose of funding his son’s US education and the living costs for 2 years of Master’s study, Mr. X needs another education loan worth INR 75 Lakh, but there isn’t another property that Mr. X can mortgage. In this case, he can use the same bungalow worth INR 95 Lakh as collateral for funding his son’s master’s degree since the previous loan covered only 10 lakhs out of the 95 Lakh property and 85 Lakh has been left unutilized.
These successive loans against the same collateral are known as a top-up loan.  In fact, if Mr. X wishes, he can take another loan out of the remaining 10 lakhs worth of property.

Alternatives to Top-up Loans
1.     If a person has mortgaged a property say worth INR 80 Lakh for a car loan. After some years, he requires 40 Lakh to fund his Canadian Postgraduate Education. What can he do? There’s a solution. If he has managed to repay 40 lakh or more worth of the mortgaged property of his first loan, he can use the same property for getting a new loan worth 40 lakh.
2.     What if the amount required is of a higher value than the value of the collateral? Suppose Ms. Z needs 45 Lakhs to finance her Master’s studies in Germany but the property is valued at INR 40 Lakh, in such a case, she can get the loan amounting to 40 Lakh against collateral and 5 Lakhs worth of non-collateral loan, resulting in a merged student loan account worth 45 Lakh.
3.     The Loan can also be transferred to another institution if the borrower wants to avail additional features such as pre-visa disbursal, which are not available with one bank but are provided by another bank. The previous outstanding loan amount that needs to be repaid can be transferred to the second bank and the new loan amount is clubbed with the previous loan amount to create a single student loan account. You might ask why the student doesn’t take up loans from two different banks at the same time? The answer is that a student cannot have two student loan accounts.
4.     Extended Loans: This option is available to those who have more than one asset that can be used as collateral. If asset A worth 40 Lakh is used for a loan worth 38 Lakh and there is a requirement of an additional 38 Lakh then the candidate may use another asset worth 38 Lakh or more, to apply for the new loan.

To provide specialized Assistance for Overseas Education Loan Process to candidates aspiring to study at reputed foreign Universities, you can contact an experienced Education Loan Advisors to help you choose the right institution and loan amount.
 Learn More:
The Use of EMI Calculator in Overseas Education Loans
Financial Tips to Help You Save Money When Studying Abroad
 

Comments

  1. Subhajit Roy29 November 2019 at 02:39

    Thank you for sharing the information, i have got the best information about Education Loan For Abroad.

    ReplyDelete

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