To get the best quality education along with practical knowledge, most students are moving overseas. Among the prominent funding choices, students are opting for overseas education loans. Study abroad aspirants can avail of two types of education loans i.e., Secured and Unsecured Education loans. While a secured education loan brings a lot of benefits as compared to that of an unsecured education loan, it requires one to pledge a security.
For taking secured loans there is a common misconception among students that they cannot pledge a housing loan property as collateral security. But this is not the absolute truth. A mortgage home loan property can be pledged as collateral security for availing of a secured overseas education loan.
In this article, we are going to clear off all your doubts and notions about availing an education loan to study abroad on a property that is already mortgaged under the home loan. Scroll down to read more.
Due to the lack of information about various clauses of education loans, aspirants are not aware that they can get an overseas education loan on a home loan property. Our real-life case studies will help you understand this better.
Multiple Loans on a Property
If your property is valued at INR 1 crore, you can use it to secure various loans like home loans, personal loans, education loans, etc. If the total borrowed amount does not exceed the approved limit.
Loan Extension on Partially Paid Home Loan
For a property valued at INR 50 lakhs with a home loan of INR 40 lakhs, if INR 30 lakhs of the loan is already repaid by the parents. Then, the remaining INR 10 lakhs balance makes you eligible for an education loan extension on the same property.
75% Loan Eligibility
If your property is worth INR 1 crore, banks generally allow loans up to 75% of its value (INR 75 lakhs). If you already have a home loan of INR 40 lakhs, you can still secure an additional INR 35 lakhs against the same property. No fresh valuation or search report is needed if these documents are still valid.
Sibling’s Loan Doesn’t Block Your Eligibility
Even if your sibling has used the property to secure an education loan, you can still avail the loan. Provided there is enough remaining loan eligibility on the property. Otherwise, you will have to take a non-collateral education loan.
100% Funding for Prime Listed Universities
If your parents have a home loan with a public-sector bank like the Bank of Baroda and you are admitted to a university in their prime listing, you can get 100% education loan funding. Transferring the home loan to meet visa requirements, like pre-visa disbursements for tuition and living expenses, simplifies the process.
Clearing Small Home Loan Balances
If your home loan has a small outstanding balance like INR 2 or 3 lakhs, clearing it and obtaining a No Objection Certificate (NOC) along with a loan account statement (showing NIL balance) allows you to release the original title deed and pledge the property for a new education loan.
Choosing the Right Bank
If your bank’s loan terms for interest rate, loan margin, or maximum loan amount do not align with your education funding needs, consider switching to another bank. For instance, if your education costs INR 47 lakhs but the bank only offers INR 25 lakhs, it’s worth exploring better options.
Now that you have an idea about real-life situations, going further let’s have a comparative analysis of education loans versus taking loans against property.
While both options involve borrowing against property, they serve different purposes and come with distinct loan terms:
Overseas Education Loan: These are specifically made to cover educational expenses, often with benefits like potentially lower interest rates, and substantial moratorium periods with repayment starts after course completion.
Loan Against Property (LAP): It is a multi-purpose loan that can be used for various needs, not limited to education. Interest rates may be higher depending on the loan type, and repayment begins immediately.
Choosing between the two depends on your specific financial needs and repayment ability. Now that you have an idea about the differences, let us proceed to the next section and understand the important considerations.
Before proceeding with the process of taking an overseas education loan on your existing home loan property, carefully evaluate the following:
Property Equity: Make sure that sufficient equity remains after accounting for the existing home loan.
Bank Policies: Different banks have varying criteria for granting additional loans on mortgaged properties.
Repayment Capacity: Assess your ability to manage repayments for multiple loans simultaneously.
Documentation: Be prepared to give all necessary documents, including NOCs and updated property valuations.
Since this process is slightly different from the regular overseas education loan application process, consulting with overseas education loan experts like Élan can help you complete this process effectively.
When applying for an education loan against a property with an existing home loan, specific documentation required is listed below.
Property Title Deed: The legal document proving ownership of the property.
Chain of Documents: This legal ownership document consists of a 30-year sale history of the property.
Mutation Copy: Issued by the local municipal body of your city, it is an official document certifying the change in property ownership.
No Objection Certificate (NOC): A statement from the existing lender permitting the use of the property as collateral for an additional loan.
Outstanding Loan Statement: Details of the remaining balance on the current home loan.
Property Valuation Report: An assessment to determine the current market value of the property.
Encumbrance Certificate: Also known as Statement of Encumbrance on Property, it is a document confirming that the property is free from legal or monetary liabilities, apart from the existing mortgage.
These documents help the new or existing lender assess the property's value and the feasibility of granting an additional loan against it. Another way to evaluate the property value is by checking it yourself on a home loan property calculator. Read ahead to get an idea of the process.
To estimate the loan amount, you can avail against your mortgaged property. Consider the following parameters and calculate the amount accordingly.
Property Valuation: Find out the current market value of your property.
Existing Loan Balance: Check the outstanding amount on your home loan.
Loan-to-Value (LTV) Ratio: Banks typically offer loans up to 75% of the property's market value. Get an estimate of this as well.
Calculation Example:
Property Market Value: INR 1 crore
LTV Ratio: 75% of INR 1 crore = INR 75 lakhs
Existing Home Loan Balance: INR 40 lakhs
Eligible Loan Amount: INR 75 lakhs – INR 40 lakhs = INR 35 lakhs
This means you may be eligible for an additional loan of INR 35 lakhs against your property. Many banks and financial institutions offer online loan calculators to assist with these estimations. But before you start the application process, you need to gauge the best interest rates offered. Going forward with this article, let’s have a glance at the interest rates of different financial institutions.
Interest rates for education loans secured against property vary across financial institutions. As of 2025, here are the student loan interest rates offered by the leading banks:
|
Banks |
Starting Interest Rates (Annual) |
|
Union Bank of India |
9.25% |
|
IDFC First Bank |
9.50% |
|
Bank of Baroda |
9.75% |
|
State Bank of India (SBI) |
10.15% |
|
Bank of India |
10.25% |
|
Punjab National Bank |
10.25% |
|
ICICI Bank |
10.25% |
|
Axis Bank |
10.50% |
|
Bank of Maharashtra |
10.55% |
|
Yes Bank |
11.50% |
Please note that these rates are indicative and subject to change. Additionally, we recommend you to check the latest rates directly with the bank’s official websites or confirm with team Élan.
As you have read, getting an education loan against a property with an existing home loan might seem complicated, but it does not have to be. At Élan Overseas Education Loans, we make the process simple, fast, and stress-free.
From finding the best loan options to managing paperwork and ensuring quick approvals, we are here to manage it all. Think of us as your financial guide and achieve your overseas education dreams without the hassle, including education loan insurance. Schedule your counselling session with our Experts today!
Can I get an overseas education loan if I have a home loan?
Yes, you can get an education loan even if you already have a home loan. Many banks and financial institutions allow you to use the same property as collateral for an education loan, provided there’s sufficient equity left after accounting for the outstanding home loan amount.
What are the benefits of taking an education loan against a mortgaged property?
Key benefits include lower interest rates compared to unsecured loans, higher loan amounts based on the property’s market value, longer repayment tenure, and tax benefits under Section 80E of the Income Tax Act (for the interest portion).
Are there any tax benefits for education loans taken against a mortgaged property?
Yes, the interest paid on an education loan qualifies for tax deductions under Section 80E of the Income Tax Act. However, this benefit applies only to education loans sanctioned explicitly for higher education, not for general-purpose loans like a LAP.
What is the maximum loan amount I can get against my mortgaged property?
The maximum loan amount depends on the property’s market value and the lender’s policies. Usually, banks provide up to 75% of the property’s market value as a loan minus any existing liabilities.
What happens to the home loan if I take an education loan against the same property?
The home loan remains unaffected as long as you continue repaying it on time. The education loan is treated as a separate financial arrangement secured by the same property. However, the total loan amount across all loans should not exceed the property’s eligible value.
How do banks evaluate the value of a property for education loans?
Banks have certified valuers to assess the property’s market value based on its location, size, condition, and prevailing market rates. This valuation report is decisive in determining the loan amount for which you are eligible.
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