Education Loan in Karnataka

Education loans availed from banks or NBFCs in Karnataka can be used for things like tuition fees, hostel fees, exam fees, books, travel, and insurance for overseas education. The moratorium period: There should be a moratorium on the repayment of the loan which should include the duration of the course plus 6 months to a year. During this period, public banks offer simple interest on the loans while private and NBFCs offer compound interest and Equated Monthly Installments respectively. Loan margins by the applicant are at 10% for the public banks while it is at 5-10% for the private banks. Interest rate has to do with interest charges for the secured loans where in case of default, the collateral substitutes the amount. 

Expenses covered 

The expenses covered by education loans given out by banks or NBFCs located in Karnataka include,

• College tuition fee
• Fee for accommodation
• Examination costs
• Library fees
• Laboratory costs
• Price of Books
• Miscellaneous costs 
• Cost of flight tickets (For abroad education)
• Price for the applicant's insurance (For abroad education)

Moratorium Period 

The majority of Karnataka-based banks have moratorium periods of around course duration plus six months or one year. Different payback terms apply to public banks, private banks, and NBFCs during the moratorium. Simple interest payments are not required during the moratorium period at public banks. Compound interest must be paid in private banks throughout the moratorium period. NBFCs require that EMI be paid throughout the moratorium period.

Loan Margin

The loan margin, which must be arranged by the student or applicant, is a percentage of the total loan amount. The student will need to arrange with 2 lakhs in order for the loan to be approved, for instance, if the loan margin is around 5% and the loan amount is around 40 lakhs.

The loan margin at public banks typically amounts to 10% of the entire loan amount. The loan margin in private banks ranges from 5% to 10%.

Collateral Margin

The collateral margin is the part of the total loan amount that is covered or secured by collateral. The collateral margin is part of the total loan amount that is covered by collateral. For secured loans, the collateral margin is often determined. Banks utilize the collateral provided by the student or applicant to reclaim the outstanding amount in the event that the loan cannot be repaid by the applicant.

As for getting an education loan in Karnataka, the following documents are required: a filled-in application form with affixed two photographs, identity proof and address proof, and personal asset and liability details. Such documents are letters of admission, fee structure, test results, and mark sheets. Salaried income documents for co-applicants are payslip, form 16, ITR while for self-employed, income documents include ITR and balance sheet. Other prerequisites consist of the processing of cheques for the processing fee, collateral affidavits, and statements of pending loans. To secure the loans, the property documents and municipal approvals are required. The acceptable collateral for such a form of financing is houses, flats, nonagricultural land, and government securities. Get the exact list of documents by reading more.

Collateral documents which are required for a secured education loan in Karnataka 

1. The property's title deed
2. A Will, A sale contract, or A Gift deed that has been registered.
3. The initial registration receipt for the above-specified agreement.
4. A letter of allocation from the municipal corporation 
5. A 30-year connection document or A preceding chain of sale document establishing title or EC is required. It contains a 30-year timeline of who acquired the property in the 30-year period before from whom. If you have held the property for more than 30 years, the previous sale paperwork will do.
6. Recent invoices for property taxes and electricity from the same address
7. A duplicate of the plot layout or construction plan that the municipality has approved.

Acceptable collaterals in Karnataka for education loans

1. House, Flat, Non- agricultural land with boundaries 
2. Commercial properties (A few banks)
3. Agricultural land
4. FD, Insurance policy, and Government bonds   

Note: 

In Bangalore, the municipal corporation split the properties into three categories in 2007: "A Khata" properties, which are entirely legal and have paid all taxes; "B Khata" buildings, which are illegal; and "E Khata" properties, which are electronic. 

• A Khata: Everyone accepts the A Khata for an education loan in Bangalore. An 'A' Khata certificate is issued to a legal property that fulfills all Government regulations regarding building bylaws and taxation rules in Bangalore.
• B Khata: Government banks don't accept B Khata but some private banks accept it if there is DC conversion. A 'B' Khata refers to properties that are in violation of building bylaws or are pending for clearance of property taxes or do not conform to Government regulations with respect to properties.
• E Khata: E Khata refers to electronic Khata which is filed online. It allows the owner of the property to pay their property taxes online. It is mostly acceptable in some Government banks but it may depend on a case-by-case basis for Karnataka, for that Khata certificate and Khata extract is required. 
• Khata Certificate - The certificate is a document that asserts that the tax records of a particular property are in the name of the owner. It is issued by BBMP and is required for the registration of property or transfer of property in the name of the owner to any other person.
• The Extract - The extract contains all the details of a property as collected from the property assessment register. Such details include the owner's name, property size, property valuation, date of last assessment, property used for, demarcations, etc. It is valid for 5 years.

Convert B Khata to A Khata

B Khata properties deviating very little from the current laws and regulations accepted for building can be converted to A Khata. By meeting certain standards, the B Khata property's owner can upgrade it to an A Khata. Follow these few steps-

Step 1- Apply for District Commissioner (DC) Conversion to convert the agricultural land for non-agricultural use.
Step 2- Clear the property taxes if any, payable on the property as per Government norms.
Step 3- Get the Khata form from the BBMP office. Fill in the required details in the form as required.
Step 4- Collect all the documents that are required while submitting the Khata form.
Step 5- Pay BBMP the fee for converting your B Khata to A Khata. Submit the required documents and the tax receipt along with the filled-in form to the concerned area's Assistant Revenue Officer.

Generally, after submitting the form along with the relevant documents, you can expect your A Khata within a period of 4 to 6 weeks.

If you take out a secured loan of 55 Lakhs at an interest rate of 9% from a public bank in Karnataka with a grace period of 6 months and a repayment period of 15 years your repayment schedule would look something like this. 

• Monthly EMI: 64,853
• Total payment: 1,16,73,568
• Total Interest Payable: 61,73,568

WeMakeScholars is committed to providing students with reliable and all-encompassing services, and we strive to make the loan application process easier by offering post-sanction assistance.