7 Lesser-Known Factors that Affect Your Home Loan Eligibility

7 Lesser-Known Factors that Affect Your Home Loan Eligibility

Getting a home loan is one of the biggest steps in an individual’s financial journey. It is a significant investment that would dictate your financial conditions for the coming few years. Hence, people have big expectations associated with a home loan.

However, many need to check their eligibility for a home loan before applying for one. This results in unfavourable loan terms and sometimes the rejection of loan applications. While credit scores and income are well-known factors that decide your home loan eligibility, several other lesser-known factors can affect it.

The Importance of Checking Your Home Loan Eligibility

Knowing your eligibility before applying for a home loan is crucial to a seamless and successful application process. It allows you to align your expectations with realistic loan amounts and interest rates. Understanding eligibility criteria, including credit score requirements and income considerations, empowers you to address potential challenges in advance.

Additionally, knowing your eligibility aids in financial planning, ensuring you apply for a home loan that aligns with your budget and homeownership goals and preventing unnecessary setbacks during the application process.

Unexpected Things That Can Impact Your Home Loan Eligibility

While home loan eligibility criteria mostly rely on your financial performance and capabilities, here are seven lesser-known factors that can also affect the lender’s decision on your application:

  • Your Banking History

Your banking habits, characterised by the frequency and nature of transactions, play a pivotal role in reflecting your financial discipline positively. Lenders view consistent and transparent banking behaviour as a demonstration of financial responsibility.

Regular and organised transactions, responsible fund management, and a healthy banking relationship contribute positively to your creditworthiness. By showcasing sound banking habits, you project reliability to lenders, potentially improving your eligibility for a home loan as it portrays you as a financially disciplined and trustworthy borrower.

  • Your Financial Behavior During Economic Downturns
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Your financial conduct during economic downturns is a critical element influencing loan eligibility. Consistently maintaining EMI payments, even during challenging economic periods, showcases financial resilience to lenders.

This behaviour indicates a borrower’s ability to navigate adverse financial conditions responsibly. Lenders view this as a positive indicator of reliability, potentially enhancing loan eligibility by instilling confidence in your financial stability.

  • Ownership of Other Properties

The ownership of additional properties can significantly impact the evaluation of your repayment capacity by lenders. Possessing multiple properties suggests a diverse financial portfolio but may also affect your debt-to-income ratio. Lenders assess this factor to ensure you can manage repayments effectively.

  • Property Age & Type

Along with your financial capabilities, the value of the property you are investing in will determine your eligibility for a home loan. Lenders assess the type of property, its age, location, and construction type to gauge the property’s durability. Older properties or those with unconventional construction might encounter stricter scrutiny or limitations.

Understanding these preferences and restrictions is crucial for potential homebuyers, allowing them to choose properties that align with lender criteria, thereby increasing the likelihood of a smooth loan approval process.

  • Property Tax Status

Lenders run a thorough check on property taxes and other compliances before considering offering a home loan against it. Properties with unpaid taxes or irregularities may raise concerns about the borrower’s ability to meet financial obligations. It is imperative for potential homebuyers to address any tax-related issues promptly, demonstrating fiscal responsibility and enhancing the likelihood of a smooth loan approval process.

  • Builder’s Reputation

If you are purchasing a ready housing building from a builder, their market reputation will play a crucial role in deciding your home loan eligibility. Lenders meticulously examine the builder’s track record to examine the credibility of the project.

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A builder with a solid reputation for delivering quality constructions on time attracts lenders’ confidence. On the contrary, a builder with a questionable history might raise concerns, potentially impacting loan eligibility.

  • Relationship with the Lender

The nature of your existing relationship with lenders holds substantial weight in the home loan approval process. A positive history, characterised by timely payments, responsible financial behaviour, and a good rapport with existing lenders, significantly enhances your creditworthiness.

Lenders interpret a favourable relationship with past creditors as an indicator of reliability and trustworthiness, positively influencing your eligibility for a home loan. Maintaining a commendable rapport with existing lenders reflects financial discipline and strengthens your overall standing in the eyes of new creditors.

Check Your Home Loan Eligibility Online

After carefully considering all the factors mentioned above, you can use reliable home loan eligibility tools available online to check your eligibility. Tata Capital provides the best online tool to check your home loan eligibility with just a few simple steps. Along with the online platform, representatives can also help you in navigating the complicated landscape of home loans with a personal touch.


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Shankar is a tech blogger who occasionally enjoys penning historical fiction. With over a thousand articles written on tech, business, finance, marketing, mobile, social media, cloud storage, software, and general topics, he has been creating material for the past eight years.