Depending upon the loan amount, the home buyers can raise their margin money ranging from 10% to 25% in several ways
There are certain rules and regulations while the sanctioning of the loan under which , when you apply for a home loan, lenders don’t sanction the loan for the entire cost of the property. Along with this, According to RBI , lenders can’t take into account the stamp duty and registration charges, when computing the property cost. As the consequences of this, some amount out of the total amount has to be produced by the buyer himself and is called ‘margin money’. This margin money has its share ranging between 10% and 25% which depends upon the amount of the loan. There are various ways by which this margin money can be raised by the borrowers.
BY LIQUIDATING PAST SAVINGS, OR TAKING A LOAN AGAINST SEQURITIES
This acts as the most reliable and convenient source for many of the home buyers. Various types of savings (funds in bank accounts, investments in shares and mutual funds , fixed deposits investments in National Savings Certificates, etc ) can be liquidated depeding upon the requirement(s).
In the cases when the market price of your shares or mutual funds is not good, rather than selling these at loss, one can try and avail loan against the security of these assets. All the shares or mututal funds might not qualify for the overdraft facility . Since the lenders have regulations regarding the list if sharers or mutual fund schemes against which they let you avail the loan and lend the money.
LOAN ON YOUR LIFE INSURANCE POLICIES
You can avail cheaper loans against your life insurance policies, if they are not pure term plans. You can avail loan against your policy depending upon the time for which the premium has been paid, minimum loan amount etc.
WITHDRAWL FORM PROVIDENT FUND/ PUBLIC PROVIDENT FUND ACCOUNTS
EPF and PPF are meant for one’s retirement, but can also be used to buy a house. Any employee can withdraw money partially form the EPF account without giving any reason, provided, you have completed five years of contribution to it. Similarly, if you have completed six financial years in your PPF account, you can withdraw money from that too.
LOANS FROM FRIENDS AND RELATIVES
Your friends and family and other relatives can also help you to raise moany for your housing loans.
If at all, no other option is valid for you, you can also take a personal loans to raise marginal money. One of the things to be kept into mind is about the timing of the loan. If you avail a personal loan before you apply for the home loan, it may affect your home loan eligibility since the personal loan reflects in your credit report and the lender will keep into account the EMIs for your personal loan too. On the other hand, if you apply for personal loan after the home loan, you might find difficulties getting the loan sanctioned, since the home loan lender must have already taken into account your maximum eligibility for the loan. So, the timing for availing these two loans should be adjusted such that they don’t cross each other.
The interest rate on personal loans as compared to home loans is reasonably high. Along with this, you need to take into account a realistic assessment of your future cash flow. This si done so as to make sure that you can handle both the loans efficiently. Any fault in the payment of EMIs spoils your credit score and the future ability to borrow.