Top 5 ways for Home Buyers to raise Margin Money
Mar 07, 2017 Home Trading Steps
Procurement of a Home Loan is a tedious task for potential home loan seekers. For starters, your loan application must fit into the standard criteria of the bank. Bank studies various factors stated in your application such as your salary, required loan amount, property value, repayment capability to name a few. Depending on how you fare in these factors, the bank decides whether to sanction the home loan or not. However, troubles do not stop even after successful sanctioning of home loan
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In most of the cases, the sanctioned loan amount is considerably less than the desired amount. This gap is due to various factors. First of all, most of the lending institutions sanction around 75 to 80 percent of the total property value as the loan to potential loan seekers. Moreover, the total cost of the property does not include stamp duty and registration charges. So there is a large amount, called ‘margin money’, generally 25 percent of the total property value after considering sanctioned loan amount, which you need to arrange yourselves in order to buy the property. It is very important for a home buyer to plan and arrange the margin money in advance so as to buy that dream home of yours.
Let us discuss some of the ways in which home buyers can raise margin money:
1.Liquidation of current savings: People possess a considerable amount of savings such as funds in the bank account, recurring as well as fixed deposits, mutual funds, shares etc. Such type of savings can be effectively liquidated to contribute towards the margin money. One can also avail overdraft facility against certain shares and mutual funds.
2.Withdrawing funds from provident funds: It is true that funds in your provident fund account are meant to be used after retirement, however, you have the right to withdraw some amount from PF under certain conditions. If you have been contributing to your PF account for the past five years, then, you are eligible to withdraw a specific amount against your home loan. Similarly, if you have been contributing a certain amount into your PPF for at least six years, then, you can withdraw some money from it too.
3.Loan against insurance policies: If you have a cover of certain life insurance policy, then, you can avail the facility of procuring loan against that policy. Moreover, loans granted against life insurance policies are considerably cheaper.
4.The option of personal loans: You can opt for personal loans to raise some funds as part of the margin money. However, procurement of personal loan is a tricky process. Since you would have already applied for the home loan, this would reflect in your credit report. So you may not get large amount as personal loan. The bank will consider your repayment capability and since you would have already been paying Home Loan EMIs, chances are you would get very little loan amount as personal loan. Also, interest rates on personal loans are very high.
5.Borrowing funds from family or friends: Before opting to take the loan from lending institutions, you may ask your family members or close friends for some funds with a promise to repay them as soon as possible.
.
In most of the cases, the sanctioned loan amount is considerably less than the desired amount. This gap is due to various factors. First of all, most of the lending institutions sanction around 75 to 80 percent of the total property value as the loan to potential loan seekers. Moreover, the total cost of the property does not include stamp duty and registration charges. So there is a large amount, called ‘margin money’, generally 25 percent of the total property value after considering sanctioned loan amount, which you need to arrange yourselves in order to buy the property. It is very important for a home buyer to plan and arrange the margin money in advance so as to buy that dream home of yours.
Let us discuss some of the ways in which home buyers can raise margin money:
1.Liquidation of current savings: People possess a considerable amount of savings such as funds in the bank account, recurring as well as fixed deposits, mutual funds, shares etc. Such type of savings can be effectively liquidated to contribute towards the margin money. One can also avail overdraft facility against certain shares and mutual funds.
2.Withdrawing funds from provident funds: It is true that funds in your provident fund account are meant to be used after retirement, however, you have the right to withdraw some amount from PF under certain conditions. If you have been contributing to your PF account for the past five years, then, you are eligible to withdraw a specific amount against your home loan. Similarly, if you have been contributing a certain amount into your PPF for at least six years, then, you can withdraw some money from it too.
3.Loan against insurance policies: If you have a cover of certain life insurance policy, then, you can avail the facility of procuring loan against that policy. Moreover, loans granted against life insurance policies are considerably cheaper.
4.The option of personal loans: You can opt for personal loans to raise some funds as part of the margin money. However, procurement of personal loan is a tricky process. Since you would have already applied for the home loan, this would reflect in your credit report. So you may not get large amount as personal loan. The bank will consider your repayment capability and since you would have already been paying Home Loan EMIs, chances are you would get very little loan amount as personal loan. Also, interest rates on personal loans are very high.
5.Borrowing funds from family or friends: Before opting to take the loan from lending institutions, you may ask your family members or close friends for some funds with a promise to repay them as soon as possible.
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