Credit Cards, EMIs and BNPL Before a Home Loan: What to Clean Up First

About this guide

You are planning a home loan, so you stop taking personal loans. Good. But your credit card has a laptop EMI, a holiday converted to EMI, two Buy Now Pay Later plans and a large balance that you pay down every month. From your point of view, these may feel like normal monthly expenses. From a lender's point of view, some are credit obligations and all of them affect cash flow. Before a home-loan application, you do not need to become debt-free at any cost. You do need to understand what is using up your repayment capacity. Start with the difference between card spending and card debt If you spend ₹40,000 on a credit card and pay the full statement amount on time every month, that is different from carrying a revolving balance and paying interest. It is also different from converting ₹1.2 lakh of purchases into a 12-month card EMI. The important home-loan questions are: Do you have fixed card EMIs? Do you regularly revolve balances? Are card dues paid on time? How high are balances relative to available limits? Have you opened several new credit lines recently? Why card EMIs can…