What is a Margin Calculator and How is it Used?

Housing Finance

In the modern financial era, an increasing number of people are finding new ways to earn more and save more while spending less in order to fulfill their future financial obligations. But as much as there is a desire to expand, there is still scope to use the available knowledge to help people make better and more informed decisions. This article provides all the necessary information you require about margin money and margin calculation with the help of a margin calculator, brokerage calculator and other useful financial tools.

What Is Margin Money? 

Buying a house has never been an easy process. There are multiple factors one has to take into consideration, for example, economic, geological, social, and financial factors. It is well understood that real estate prices are increasing. Owning a home, however, is equally desirable.

One way that people purchase a home is by spending all the money they have. But this may lead to a shortage of finances in the future. A sound financial way to purchase a home is by taking out a home loan. In order to do that, you need to pay money to your lender, also called “margin money.”

When you apply for a home loan, the lender will approve only a percentage of the total cost of your house. That percentage could be anywhere from 70% to 90%. Once this amount is approved, the rest is to be paid by the buyer of the house. The value depends on your eligibility as well as your credit score. Margin money is to be paid as a token of trust and commitment, along with less risk for the lender. A margin calculator can help you determine this.

What Does Margin Money Depend On? 

Some important factors should be taken into account while calculating margin money, including: 

  • The market value of the property
  • The tenure of the home loan
  • Opportunity cost (the loss of other alternatives over the chosen alternative)
  • The total home loan value

Margin Calculator Formula

There is a formula for calculating the margin on a home loan or property purchase. This margin calculator formula is: 

Margin Percentage = [(Your contribution in in total value of property) / (Total value of property)] * 100

Use of Margin Money in Trade

When used in stock trading terms, margin money is referred to as “margin trading.” This refers to the buying and selling of stocks on borrowed money. That is, borrow money, invest it cautiously, potentially make more money than was invested, and then pay back the borrowed money. This allows you to earn more money in less time.

You need to be careful, however, with borrowed money. Otherwise, it is very easy to find yourself in debt. Make sure you take into consideration every factor with the help of tools such as a margin calculator.

What is a Margin Calculator?

A margin calculator helps calculate the margin requirements for future and option (F&O) trades. You can compute your outcome by entering variables such as buy, sell, exchange, product, and quantity. The margin calculator will help you calculate your output easily and efficiently.

How to Arrange Margin Money

There are several ways in which you can arrange margin money without suffering financial loss. These include:

  • Dissolving Some of Your Savings: Savings that come in the form of mutual funds or fixed deposits can be used to pay the margin money. Having said that, make sure you do not exhaust all of it at once. Save some of it to prevent a cash crunch.  
  • Take a Small Loan From Your Employer: It is always a safe option to take a small personal loan from your employer to pay off the margin money
  • Make Use of Your Investments: One of the easiest ways to find the money for a home loan margin is through the returns from your investments. It would be better if you made your investments goal-based, as this will help you reach your desired amount in a more focused way.  
  • Opt for a Top-Up Loan: As the name suggests, a top-up loan is taken on top of the existing, ongoing loan that you have taken.

It is important to carefully research and consider all the options available to you before you make a decision.

What is Brokerage?

Buying and selling stocks are not the only transactions you can make when it comes to trading. Brokerage is a big part of it. Brokerage is the fee you pay to your broker after they carry out a trade. This fee depends on the overall trading value. Brokers need to be paid an additional amount on top of the trading value, and this amount gets deducted from the trader’s account. As significant as the trade is, the higher the brokerage will be. 

What is a Brokerage Calculator?

A brokerage calculator is an online tool for traders to calculate brokerage before they make a trade. Calculating brokerage is one of many functions this tool performs. It can also evaluate and quantify the transaction fees, Goods and Service Tax (GST), Security Transaction Tax (STT) and stamp duty fees. Brokerage helps traders plan everything efficiently, giving instant results.


To sum up, trading and home loans can be made much more systematic and fast with the help of a margin calculator and brokerage calculator as they help you consider all the variables in real-time, without leaving anything out, to make a sound decision regarding your wealth and future. There are various other tools on the internet to help you find out more about trading, personal loans, and more. To get you started, visit Piramal Finance for more helpful and relevant articles like this one to get you acquainted with all things finance-related.