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06 April 2011

A Mixture of Auto, Car Loans and Credit Cards Best for Home Loans

This is the best combination for any borrower to apply for a home loan. What does mixture mean and why is this required?
Every individual has a certain amount of financial standing. This is indicated by their income, bank statements and their assets. Any lender will first see how much the borrower is qualified, their age group and of course their salary and other investments. The credit card usage will show all the financial dealings the individual does and credit report indicates the spending habits of the borrower. After viewing all the loans taken by the borrower and their timely repayment will make your position clear. Here the lender understands that you may have taken a car loan, personal loan or any other loan. Your repayment schedule will be observed and if you are still repaying the same or have repaid it will affect your new home loan application to be approved. How do your credit card usage and spending habits relate to home loan? Any lender will consider your spending habits and credit card usage. If you have remaining payments and balance savings is less then this is considered as a minus point for you. If your credit card payments are on time and you also have balance then it indicates that your spending habits are calculative and you have savings remaining from your monthly salary in the bank which can be used as EMI to repay the new loan.
Why does a mixture of all these be the best combination for loan approval?  A healthy mixture is required. First it will show that you have repaid the loan on time. But too many loans will also create doubt if you are over doing your salary and taking another loan. You can only repay according to your salary and other investments that give monthly returns. If the figure is unrealistic your loan will not be approved.  Credit cards are another option indicating your repayment capacity and that you are managing your expenses within your means. A healthy mixture of car and credit card loans will indicate your financial loan repayment capacity. Too many credit card loans though available easily are not good as they are available at higher rates of interest. 
Hence any lender will consider all these aspects and understand your financial behaviour. This will show your understanding and planning of finances. How you balance outgoings according to the incomings and how your payments are clear without and dues and defaults will definitely give thumbs up sign for your home loan approval.

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