7 things to avoid after applying for a home loan
So you want a home loan to apply for your dream house in India. Before starting the home application process, you go through the dos and don’ts. But did you know there were guidelines for what not to do after?
India’s housing demand is rising. Consequently, there is a rise in home loans. But a home loan is an investment and requires careful planning before and after the application.
You may be aware of things to avoid before the home loan application. However, most applicants aren’t aware of what comes after. It makes tracking the borrower’s assets difficult for the lending institution.
What not to do after applying for a home loan
This list aims to provide a lender’s perspective after you apply for a home loan in India. Additionally, it will also help you steer clear of unfavorable financial decisions.
So, here is a list of 7 things to avoid after applying for a home loan:
Avoid depositing large sums of cash
Cash is difficult to trace for lending institutions. Since lenders need to track your income, it is better to avoid large cash deposits.
Avoid big purchases like cars, appliances, etc.
Large purchases after a home loan application increase the debt-to-income ratio. What does this mean for you and your lender?
From the lender’s perspective, you may become a credit risk. Large bills create a sizable difference between your existing income and debts.
As a borrower, you have more outstanding debt. It can affect your creditworthiness and, consequently, your credit score.
Don’t co-sign loans for other people
When you co-sign loans for others, it means you become accountable for their debts. It is a bad idea, especially when you have a home loan to apply for in India. The lending institution has to count this debt as yours. It also means you have a higher debt-to-income ratio.
Avoid closing any accounts
Your credit history is more than your payment history. Suddenly closing any accounts may adversely affect your creditworthiness. It impacts the depth and length of your credit history.
You may think you’re reducing your risks by closing accounts. But it is different from a lender’s perspective. The closing of accounts merely signifies your payment history.
Don’t apply for new lines of credit
Applying for new lines of credit with an outstanding home loan application is often seen as a red flag. You may argue that it is only a new credit card. However, it will affect your overall credit report. Why? When different financial channels have your credit run, it affects your credit score. It includes mortgages, credit cards, or even auto.
Additionally, a low credit score impacts your eligibility for loan approvals and interest rates.
Don’t change your bank accounts
Maintaining consistency makes the job easier for lending institutions like NBFCs and banks. Changing bank accounts or transferring money to a different one can interfere with tracking. It is better to consult your lender, especially if you have to transfer money to a different account.
Avoid changing your annual income
Don’t change your job if you have an existing home loan application. It is because the lender must annually account for the source of your income. For instance, switching from a salaried position to receiving commissions or becoming self-employed is difficult for the lender to track.
Changing the way you receive your income can also pose a problem. The lending institution tracks the sources of your annual income. Any change might prove a difficulty in sourcing for the lender.
Bonus: How to stay on top of your debts after a home loan application
Taking care of your finances after a home loan application in India can be difficult. Here are some bonus tips to assist you with your finances, which include using the Andromeda home loan EMI calculator:
- Track your annual income, assets, and credit report for better financial planning.
- Use calculators like the Andromeda home loan EMI calculator for your home loan application. It will help to fine-tune your financial planning.
- Consider consulting your loan officer before any financial decisions. It encourages communication and may also help you find suitable alternatives. The lender will appreciate it as it makes tracking your assets easier.
- Update yourself on the real estate and home loan market in India.
- Paying your bills also helps.
Securing your dream house can be a hassle, especially in the competitive Indian market. The excitement of buying your dream house is only natural. However, getting a home loan to apply in India means you also have a list of things to avoid. It allows the lender and borrower to manage home loan debts more efficiently.
