Types of Collateral Security Acceptable for an Education Loan | GyanDhan

Types of collateral accepted -

  • Immovable assets - These can be real estate assets such as a land, house, flat, etc. It should be remembered here that agricultural land or land that falls under the jurisdiction of Gram Panchayat is not accepted as collateral by lenders. However, non-agricultural open land that has clear boundaries is accepted as collateral for secured education loans.
  • Intangible assets - These are liquid securities such as fixed deposits, mutual funds, ULIPs, Life Insurance policies, Government Bonds, etc. The bank will keep the liquid securities such as FDs, However, the FD holder will continue to get any interest received on these intangible assets. Borrowers can pledge an old FD or even open a new FD for an education loan.
  • Third-party secured education loan - This is a little-known type of collateral accepted by lenders and includes immovable assets of a third party (relative or friend).

Collateral documents required for an education loan

The list of documents will differ from lender to lender. Here is a general list of documents are required for an education loan with collateral -
  • Property Title Deed
  • Registered Sale Agreement
  • Original registration receipt for the above agreement
  • Allotment Letter By Municipal Corporation / Authorised Govt. authority such as MHADA, CIDCO, HUDA, DDA, JDA, GIDC, etc
  • Previous chain of sale deed establishing title
  • Most recent property tax bill or most electricity bill having the same address
  • Approved plan/map if the property being pledged is a built one
  • Link documents, that prove the ownership history of the said property for the previous 30 years
  • A latest property tax receipt
  • Occupancy proof

This is a companion discussion topic for the original entry at https://www.gyandhan.com/blogs/collateral-security-for-education-loan

Can I keep my village house as collateral for an education loan? How much loan amount can i take in this case?
Plzz help

Hi @prath.makh,

The village house can be kept as collateral as long as it does not come under the jurisdiction of Gram Panchayat. Non-agricultural land or land that is not under the said jurisdiction is and will be accepted as collateral.

The loan amount will depend on the value of the collateral that you are pledging. Please remember that the value should be equal to or more than the loan amount required. It means that if you require INR 30 lakhs for a loan, the value of the collateral should be around INR 40 lakhs to INR 45 lakhs.

I hope this helps you. All the best!