Until your home loan is sanctioned, some silly mistakes on your part before making the first move can derail the most important goal of your life.
If you are planning to buy a home and think that your home loan application can easily get accepted by the bank, think again. While a good income is certainly a criterion for lending, a bank takes into consideration a whole lot of other things too before deciding to lend.
Buying a home is everybody's dream. And a variety of finance options make us believe that realising this dream into reality is not that difficult. But it's not easy either. The first step towards the same is getting the loan sanctioned. And this includes certain behaviours of yours before you apply for the loan.
Take a look at the things you should not do till the mortgage you want is sanctioned.
Do not change your job
While the offer of a new job is enticing, you should refrain from job-hopping when you have to apply for mortgage few months down the line. Frequent change of jobs is viewed suspiciously by lenders as it implies job instability.
Your mortgage request can be rejected on account of this as lender place a high value on the latter. You need to be employed at one place for certain time duration in order to be eligible for the home loan.
This period can range anywhere from one to three years.
You should not take your address lightly
You should not change your residence between the time of applying for the loan and till the same is sanctioned. This is because the address that you mentioned in the loan application form would be investigated by the lender during Contact Point Verification (CPV) check.
If your CPV check is negative, that is if you are not available at the residence mentioned by you, the loan application can be rejected.
Do not close an old loan account
While it is a known fact that a bad credit behaviour hurts your CIBIL score, you must also know that some good credit behaviours can also have a negative impact on it.
And closing one of your old credit card accounts, especially if it has a clean repayment track record, is one of them.
This is because the length of the credit history is an important factor in determining your CIBIL score. The longer it is, the better it is. So you should avoid closing any credit account before applying for a home mortgage.
Avoid taking another line of credit
If you have to apply for a home loan in few months' time, drop the idea of adding another line of credit. In calculation of your home loan eligibility, your existing lines of credits are also taken into account.
Suppose you want a loan of Rs 25 lakh on which home loan EMI works out to be Rs 25,000. But if you had taken a personal loan sometime back towards which you are paying Rs 10,000 as EMI, then as per fixed obligation to income ratio the reworked EMI for the home loan would be only Rs 15,000. Accordingly, your home loan eligibility would be reset.
If you pay heed to the points mentioned above, closing your home loan mortgage will be a smooth sailing process.
The author is Co-founder and Director Credit Vidya.