Self-Margin – What’s your margin & how much of that you pay upfront?

PV – Property value excluding registration 

There are two options

• Upfront Self Margin
• Stage wise Self Margin

Upfront Self Margin: In case of ready to move in properties, resale or first sale, your margin and the bank loan have to be paid upfront as there is no waiting period (construction period).

Stage wise Self Margin:  Stage wise payment of the self-margin/self-contribution is applicable only for under construction properties. However, if you have funds, you may choose to pay your margin upfront. 

Also, in some cases the builder may insist that you pay your margin upfront.

Let’s explore the options of stage wise self-margin.

Two prominent options of staggered or stage wise payment of Self Margin are

• 10:80:10 Funding
• Parallel Funding

All other funding options will be a variation of these two.

Let’s look at each one of them.

1) 10:80:10 Funding:

As the name suggests, you pay 10% at the sale agreement stage, the bank pays 80% during the construction stage and again you pay the balance 10% towards the end at the time of registration.

Benefits of 10:80:10

You get sufficient time of 1/2/3 years to organize & save your balance 10% of self-margin money.

Drawbacks of 10:80:10

• Not all builders get this kind of funding tie ups from banks.
• Not all banks provide this kind of funding.

An example of 10:80:10 with numbers:

Who pays How much and When?

Some builders & banks have now improvised on this offer by making it 5:80:15 where in you as a buyer needs to put in only 5% upfront and 15% at the time of possession.

2) Parallel/Proportionate Funding:

Here the bank calculates the percentage of margin you paid on your total payable self-margin & proportionately releases funds from the bank’s total contribution.  

Let’s look at the same example with numbers:

Who pays How much, When & with What consideration?

Benefits of Parallel Funding

• Most banks will offer this or in some variant to this.
• You get enough time to organize & save your balance 10% of self-margin money but not till possession as you have to start contributing once the bank reaches the percentage of your initial paid contribution.