With the price of real estate rising so high, buying a house can be challenging with your income and savings alone. Even with sufficient funds, purchasing a house requires additional monetary support. In that case, a home loan is a convenient and effective tool. You can own your dream house using a home loan and repay it in a specific time. However, to secure a housing loan, you should pay margin money.
However, when you file for a home loan online, your lender will not sanction a loan for the entire amount. Also, according to the RBI’s instructions, lenders don’t consider the registration fee and stamp duty charges when calculating the property cost. So, the buyer should secure a major portion of the buying amount. This is known as margin money. The margin money contributes 10% to 25% per the loan amount.
As a buyer, you must look for ways to manage the margin money and draft measures to pay your future EMIs safely. Here are some ways you can do it.
Longer tenure
Increasing your tenure is a good way to tackle your high-interest rates and get some margin money for your home purchase. The longer the duration is, the lesser the EMI will be. However, longer durations add to the final cost of the loan. Hence, making a careful call after assessing all the results is essential.
Liquidate your past savings or take a loan against your stocks and securities.
This is a major source for most home buyers to finance their down payment. The savings can be in any form, such as fixed deposits, savings in bank accounts, stock investments, and mutual funds. According to your requirement, you can liquidate them.
Sometimes, the buyer can also liquidate these funds for their EMI payments. If they face a cash crunch, they can eventually sell some of their investments in shares and clear their immediate or next few months’ EMIs using that money.
Often buyers also choose to go for an overdraft facility against these assets rather than liquidating them at a loss. It is essential to understand your financial situation and take steps accordingly.
Loan against your life insurance policy
If you own a life insurance that is not yet mature, you can get a loan against it, subject to specific situations such as the number of years for which the premium is given, the loan amount you will receive, and more.
Withdraw your PPF and EPF
While your provident and public provident funds help you during your retirement, you can also use them to purchase a home. You can partially withdraw the money if you have paid for the PF for five years. If you have paid for six years for your PPF, you can partially withdraw funds from that account.
Home loan balance transfer
Though the housing loan interest rates in the market are consistently rising, you will always find differences in the rates from different lenders. Thus, you can shift from your current lender to a new one offering a better housing loan interest rate. It is a good way to secure a reduced interest rate and lower your housing loan interest rate.
Increase your EMI
Increasing your EMI reduces your interest cost, allowing you to clear your loan easily. This further helps you reduce your interest rates and margin money. However, providing sufficient documents to the bank is important to ensure you can clear your loan quickly. If the lender is confident you will repay the loan quickly, they will increase your EMI.
To conclude
Your housing loan interest has a major role in your home loan. Finding ways to manage it, in the long run, is essential. However, the interest rates come later, as managing your margin money is the first step. Keeping the above points into consideration will help you manage your margin money and interest rates to a great extent. Lastly, choosing a reliable loan provider is important to enjoy a hassle-free and seamless procedure.