A borrower pays some amount of money to the bank or non-banking finance company from his or her own pocket to become eligible for home loan. This amount is the borrower’s own contribution in home loan. The builder or reseller issues a money receipt to the borrower and this this known as the margin money receipt or own contribution receipt.
Most lenders ask that borrowers pay at least 20% of the cost of the home from their own means.
With the own contribution in home loan, the lender reduces their risk of lending. The own contribution in home loan also underlines the financial commitment of the borrower to the property. Therefore, with own contribution in home loan, lenders offset their risks and offer the borrower a home loan for the remaining amount.
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