HOW TO PLAN MARGIN MONEY FOR HOME LOAN-Tips To Help Arrange For Down Payment Needed While Buying A Home
FINANCING YOUR DREAM HOME
Home Loans In India
Buying a home with a home loan is no doubt a major financial commitment on your part. It requires a good amount of financial planning. There are several benefits of purchasing a property with a home loan, but to avail of all the benefits, including saving on income tax, you need to be aware of your personal finances. And how you can use them to maximum benefit. It is mandatory for you to arrange your down payment (margin money) on your home loan before it can be sanctioned by the concerned bank.
How Much Margin Money Is Required For A Property In India
Borrowers are required to make a down payment (margin money) of at least 20 % of the property's value. Earlier, this margin money amount was between 10 and 15 %. The RBI (Reserve Bank Of India) has recently increased the margin money requirement for home loan borrowers, especially on those with property value above 20 lakhs. Depending on the bank you are availing your home loan from, you will be required to arrange for funds between 20 and 25 % of your property's value at the time of availing the home loan.
Ways To Arrange For Margin Money
Your Hard Earned Savings : Liquidating your savings is the easiest you can think of, but it is wise to set aside enough for contingencies. And take into account prematurity charges, higher returns expectations for the future,etc.
Loan On Your Savings : Instead of liquidating your savings, you can choose to take a loan on the savings to arrange for the funds needed. Loans available against savings instruments such as FD's(Fixed Deposit) varies between 50 and 75 % of its value. Some banks offer as much as 90 % so it is good to check with your bank. Also bear in mind that the rate of interest charged on a loan against savings instruments is higher than the returns on the instruments.
Loan From Your Employer : Employers often offer their employees soft loans which can be utilized for part of the margin money amount. This is definitely worth taking since most often the interest rate is low or nil. But, this will be adjusted in your monthly take home which you must be ready for.
Top Up Loan : This is offered by some banks to help you bridge the gap in funds for down payment. But, be aware that these come with a higher rate of interest and it could be a bigger financial burden.
Always, take your time in planning your margin money before you seek that home loan. Yes, that property you saw and fell in love with, may be gone tomorrow to another buyer, but you will be better off knowing how you will manage your finances and whether it is really within your reach. I believe strongly that if it has your name on it, you will surely be able to find the necessary finances, but you need to be smart in planning it out.
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