When you apply for a home loan, the bank or lender usually does not cover the entire cost of the property. A certain portion of the total price must be paid by you: this is known as margin money. In simple terms, it’s your personal contribution towards buying the home, while the remaining amount is financed through the loan.
For instance, if a bank funds up to 80% of the property’s value, you will need to pay the remaining 20% as margin money. It’s important to plan this amount in advance, as it reflects your financial stability and commitment to the purchase. Understanding margin money helps you prepare better and manage your finances smartly before applying for a home loan.
- Margin money is the initial payment you make when buying a home — usually around 20% of the property’s cost.
- The remaining 80% is generally financed by the bank or housing finance company as a loan.
- It represents your financial share or stake in the property purchase.
- Lenders require margin money to ensure borrowers have a personal investment in the property.
- You can start saving early, plan your budget carefully, or use liquid assets to meet this requirement.
- Having sufficient margin money improves your loan eligibility and may also get you better loan terms.
- Understanding and planning for margin money helps ensure a smoother, stress-free home loan process.
Planning your margin money is the first step towards homeownership. Once you know how much you need to contribute, the next step is finding out how much loan you qualify for. Check your home loan eligibility with Bajaj Finserv to understand your borrowing capacity and plan your budget accordingly. You may already be eligible, find out by entering your mobile number and OTP.
What is margin money in home loan?
Margin money is the down payment you make towards the total cost of the house. Lenders finance only up to 80% of the property’s total cost and the rest remains as margin money. Lenders treat this upfront payment as a sign of commitment, and a large payment reduces the lending risk.
Lenders decide the amount of margin money required based on factors such as the following.
- Market value of the property
- Tenor of the home loan
- Total home loan amount
- Opportunity cost
Margin money for loans for properties under construction depends on the stage of construction of the property.
In general, when you take a home loan, you must pay at least 20% of the cost from your own pocket. The exact percentage may vary according to the loan amount, the property type, and the lender’s policy. For example, Bajaj Finserv finances up to Rs. 15 Crore* with flexible repayment tenures of up to 32 years. Their margin money requirements are as follows:
- Up to Rs. 30 lakh – 10%
- Between Rs. 30 lakh and Rs. 75 lakh – 20%
- Above Rs. 75 lakh – 25%
A higher margin contribution can also help reduce your EMI burden and total interest cost.
Now that you understand the margin money requirements, take the next step towards securing your dream home. Whether you are arranging 10% or 25% as your contribution, Bajaj Finserv offers competitive interest rates starting at Rs. 15 Crore* Check your loan offers with Bajaj Finserv to see personalised terms based on your profile. You may already be eligible, find out by entering your mobile number and OTP.
What is margin money receipt?
Once you contribute the margin money for the home loan, the lender issues a receipt for the amount. That is the margin money receipt.
Margin money requirements: How to arrange it?
There are several ways you can arrange for the margin money for home loan financing:
- Save early: Start saving well before you plan to buy a home. Regular savings can help you build a substantial fund over time, easing the pressure when it’s time to pay your margin money.
- Prepare a budget: Track your monthly expenses carefully and reduce unnecessary spending. A well-planned budget allows you to identify areas where you can save more effectively and stay financially disciplined.
- Liquidate part of your savings: You can sell or withdraw from your existing investments, such as fixed deposits, mutual funds, or recurring deposits, to raise money for the down payment.
- Avail a loan on savings: Some banks allow you to take loans against your deposits or investments, which can be a useful short-term solution.
- Take a soft loan from your employer: Employers sometimes offer soft loans at lower interest rate or flexible repayment terms, which can help cover your margin money requirement.
- Opt for a top-up loan: If you already have a home loan and need extra funds, you can request a top up loan from your lender, usually at a lower rate than a personal loan.
Once you have arranged your margin money through savings or other sources, you are ready to apply for financing. Bajaj Finserv offers home loans with minimal documentation and approval within 48 hours*. Check your eligibility for a home loan from Bajaj Finserv and get one step closer to owning your dream home. You may already be eligible, find out by entering your mobile number and OTP.
Also read: What is down payment in home loan?
Helpful resources and tips for home loan borrowers
