What is a margin money receipt?

So, what is margin money in loan? When you provide the margin money in loan, the lender will give you a receipt for the contributed amount.This receipt for a margin loan is known as the margin money receipt, which serves as proof of your contribution towards the home loan's down payment that the customer will provide for margin money. Now that you know what is margin in loan is, you should explore loan margin meaning to understand it better.

How much margin money will I be expected to pay?

The amount of margin money you are expected to pay for a home loan may vary depending on the lender and the loan terms.Typically, lenders require borrowers to pay a certain percentage of the property's value as margin money or a down payment. The margin money required for a home loan may range from 10% to 20% of the property's value.

Can We Pay Higher Margin Money Than the Actual Amount?

Yes, you can pay a higher amount of margin money scheme than the actual requirement specified by the lender.A higher margin amount may help you get the lowest home loan rates, which can lower your EMI (equated monthly instalment) and interest charges. This also helps improve your loan approval chances, demonstrating your financial stability and repayment capacity to the lender.

Margin Money in Home Loan - Meaning & How to Arrange For It

Apply Now

With the skyrocketing prices of real estate, it could be a challenge to purchase a house with your savings. Even if you have enough funds, buying a house entirely from your pocket can exhaust your savings, leading to a cash crunch in future. Instead, availing a home loan could be a better option. You can purchase your dream home with a home loan and repay over a comfortable tenure. However, to get a housing loan, you need to pay margin money to the lender.

What Is Margin Money?

When you apply for a home loan, the lender approves a percentage of the total cost of your house. It is usually 70-90% of the property value, depending on your home loan eligibility and credit score. The remaining amount that you need to pay to purchase the house is called margin money. Also called down payment, you need to pay this margin money upfront while availing a home loan. Usually, lenders require you to pay at least 20% of the property value as margin money. However, you can pay a higher amount too. It is considered as sign of trust and lowers the risk for the lender.

If you are planning to purchase a house through a home loan, here are some tips to arrange the margin money.

Tips to Arrange Margin Money

Use your savings
You can liquidate your savings to arrange for the down payment. But, ensure that you leave enough savings behind for contingencies. Similarly, do not dig into your insurance policy or emergency fund to pay the margin money.
Utilise investments
Investments are an easy way to arrange for the down payment and even home loan EMIs. If you invest in any profitable instrument, its returns can help you pay the down payment. However, it is crucial to start goal-based investments focusing on the target amount, time in hand and risk profile. You can invest in mutual funds, bonds or equity funds depending on your risk tolerance. Usually, equity funds are preferred for long term investments. For the short term, you can opt for bonds and deposits. Moreover, you can liquidate low yielding investments like bank deposits to finance your down payment. You can always liquidate investments that don't fit into your financial plan or are not earning expected returns. But while liquidating investments, ensure to consider their lock-in period.
Opt for secured loans
While taking an unsecured loan such as a personal loan might not be beneficial, you can avail secured loans to arrange funds. Many lenders allow you to avail loan against your savings or insurance policy. Moreover, you can also borrow money from your family and friends and pay the margin money on time.

It could be difficult to arrange for margin money immediately when you apply for a home loan. Therefore, experts suggest starting saving a few years before purchasing a home so that you can comfortably arrange for a down payment. You might need to save some extra money or postpone any expensive purchases. However, saving for your home at an early age would help you arrange margin money easily.

Other Important Things to Know About Margin Money

A brokerage account enabling investors to buy securities exceeding the account balance is called a margin account, which lends margin money to the investor. Margin money meaning, this type of account utilises the cash or securities currently in the account as collateral for the loan. If you don't understand what is margin money, buying securities on margin allows investors to increase their purchasing power and potentially increase returns, but it also carries additional risks.