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How to Secure an Overseas Top-Up Loan with an existing Loan?

Thousands of aspirants in India plan to study abroad every year. New Ministry of Foreign Affairs statistics show that students studying abroad increased when the pandemic hit. According to a forecast by the management consulting firm RedSeer, 1.8 million students will spend $80 billion who choose to pursue higher education abroad in 2024.

You can use the funds from your loan to pay for anything linked to your education, not only college. The money from the loan is supposed to go toward the student's tuition, fees, books, and supplies, as well as their living expenses while pursuing higher education abroad. 

The Value of a Study Abroad Loan

Students who, for financial reasons, had been prevented from pursuing higher education were given a lifeline with the introduction of education loans. Numerous students benefited from the State Bank of India's creation of Education Loans in 1995. Most banks in India, both public and private, now provide education loans.

Loans for Higher Education can be Beneficial in Several Ways

Loans for higher education include advantages beyond just covering the cost of tuition, such as:

  • Keeping emergency funds apart from other savings
  • Stationery and Laptop
  • Projects expenses while at university

Let’s start with the most critical aspects of top-up loans. The best place to apply for such a loan is at the financial institution from whom the borrower had already taken a home loan/student loan. Because that’ll be an easier time to get a loan approved. 

Here are the two scenarios:

The 1st scenario:

Let's pretend you have an existing domestic education loan in your country for undergraduate, and now you need another education loan for a Master’s study abroad education. 

You have borrowed the sum of 5 Lakhs for your UG spanning 4 years which has a moratorium period of 1 year. Now you want a top-up education loan to do a Master’s in the USA for two years of 40 Lakhs against security. This brings your total loan amount to 45 Lakhs (First loan and second loan including). This total amount of 45 Lakhs can be your initial approved limit for a loan. Your EMIs from the initial loan will be moved after the top-up loans moratorium period, which will be a total of 6 years plus a grace period which can be of 6 months to 1 year.

Advisable would be to take the top-up loan from the same bank. You would have to send a request letter for the Top-up loan, and an extension of your moratorium period.

The 2nd scenario:

You have an existing study abroad education loan for a bachelor’s for four years of 40 lakhs which has a grace period of 1 year. Your first EMI for your initial loan starts after completing your Bachelor’s degree. Now after your Bachelor’s you have decided to opt for a Master’s and want to continue your study abroad journey. You need another two-year top-up loan with a grace period of 1 year for 30 Lakhs, this makes the total loan amount 70 Lakhs. 

When your top-up loan gets approved, your first EMI will commence after your Master’s degree and the grace period given by the bank. 

This process allows students to get the education they want without the worry of repayment of loans. 

Note that you will have to send a letter to the borrower about the change in your moratorium period.

You can always contact our financial consultants at ELAN services if you need an expert opinion. 

Secured Overseas Education Top-up Loan

Many students need a second study-abroad loan, like a secured overseas education loan, especially those offered by a government-backed bank. This is because private lenders do not provide the same perks that federally insured banks do, such as lower interest rates, etc.

When considering a second education loan for abroad studies, the value of the collateral offered is crucial to the loan. If you have already used collateral to get an education loan, you will need to verify that the value of that collateral is sufficient to support the new loan.

When applying for a second study-abroad loan from the same financial institution from which they paid their first loan, applicants should keep a few things in mind. There are two possible outcomes when taking out a second education loan.

If you have already started with the repayment process of the initial loan, then you must continue making your EMI payments on time as per your repayment plan's terms.

This was all about secured loans. Let’s look at the unsecured loan options below. 

Unsecured Overseas Education Top-up Loan

Candidates can also apply for a second loan from a different financial institution. Before applying for a dual education loan from a different lender and getting a NOC (No Objection Certificate) from their current lender to pay for their study abroad education. Candidates must make sure they have paid off their existing education loan in full. This must be challenging and may cause applicants to wait for the repayment period before applying for the 2nd loan, which will not be a top-up loan. 

Let’s look at another scenario where, if you need money for school but don't have a mortgage and can't get a top-up loan from a government bank, you can contact an unsecured overseas education loan like NBFCs. NBFCs often look into the credit histories of all co-applicants before deciding whether to give a student a loan. If you want to apply for an unsecured student loan to study abroad, you'll need a co-applicant with a good credit history who can provide the necessary documents.

Applying for a loan can be tedious; every financial institution has its barrier and guidelines you may need to follow; above are the general guidelines an applicant must know before applying for a top-up loan. 

Banks can be cautious when providing a loan supplement for international students. On the other hand, Elan Loan Services is a one-stop solution for all your study-abroad loan needs, providing a profile evaluation, financial assessment, and unbiased comparison of banks/financial institutions at no additional cost. To help you avoid any stressful situations at the last minute, Elan Loan Services will get you a fully funded loan with a low-interest rate that can be disbursed quickly. 

Want to get a Second Education Loan for Abroad Studies? Talk to our consultants today!

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Over the years, the demand for overseas education has increased rapidly. 
How to Secure an Overseas Top Up Loan with an existing Loan
Thousands of aspirants in India plan to study abroad every year...
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