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Can I take Loan against Property without Income Proof?

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We constantly have a long list of things to accomplish that require capital, and we frequently wonder, “Where do I get the money from?” If you’re hesitant to take out a Personal Loan but have a property registered in your name, you have the option to avail of a loan against the property. What is it, how can one get the loan, what will be the loan against property interest rate and what documents are required to proceed are some of the questions that will be discussed here.


What is Loan Against Property?

Almost everyone has experienced some sort of financial crisis at some point in their lives. If you are in the situation and have a property, you can pledge it to get a loan against the property. A Loan Against Property (LAP) is a type of loan one takes on residential or commercial property. The loan amount can be utilized to meet a variety of your financial goals that necessitate lump-sum spending at one go. 

Before approving the loan and deciding the loan against property interest rate, the bank first assesses the property’s market worth. If the title deeds are deemed to be clear and free of any legal issues, the loan will be approved and a percentage of the property’s current market value will be calculated to issue a loan amount to the borrower. The issue arises when the borrower doesn’t have income proof and hasn’t filed an ITR. 

To understand the borrower’s repayment capacity, income proof is required. The amount of loan that can be sanctioned to the borrower is determined by the borrower’s income. The bank establishes the borrower’s creditworthiness by their previous income records. Hence, obtaining a loan against property without income proof can be tough if you do not have a steady source of income. 

Want to avail of a Loan Against Property but do not have Income Proof? Here’s is how to do it!

As the name suggests, a loan against property can only be issued against the property but banks need proof of income as well from the borrower to understand their repayment capacity. If you are unemployed or don’t have any other source of income, this can be challenging. If you want to get a loan against property without income proof then you must know that the process is a little lengthy and may require you to meet additional requirements. Here are some strategies you can follow:

Submit an application with a co-applicant: There are a number of benefits of having a co-borrower on your loan application. If you have a family member with a strong credit history and a regular stream of income, ask them whether they would be interested to be a co-applicant. Adding a salaried co-applicant will increase the chances of your loan application getting approved. It not only allows the borrower to obtain a larger loan amount, but it also provides confidence to the lender about your ability to repay the loan. As they get income verification from your co-applicant, the co-applicant will be deemed the primary borrower and that might help you avail loan against property interest rate at a reasonable rate. 

Check your previous transactions: Always have a look at your savings bank account transaction before applying for a loan, as lending institutions check bank statements after you submit an application for a loan. A borrower must keep a minimum balance in their bank account. 

Speak to your relationship manager: Every savings bank account holder is allocated a relationship manager. S/he can assist you with the loan against property without income proof application process and connect you with the appropriate individual. Having an honest discussion about the lack of income documents and assuring them of timely repayment will help your case. Moreover, filing ITR is very important. If you haven’t filed it for the previous year, please explain the reason genuinely to the officer. Explain to the concerned person why you did not file an income tax return in the current or preceding year due to unforeseen circumstances. Also, to be on the safer side, consult a tax consultant right away and file your taxes for the current year. 

Select a lower loan-to-value rate: The Loan to Value Ratio is the amount of money a bank can lend you based on the market value of your home. If you choose an LTV of 80 per cent, for example, the bank will cover 80 per cent of the cost and you will be responsible for the remaining 20%. If you choose a lower loan-to-value percentage, your chances of getting the loan against property without income proof increase instantly.

Explain your income and earning sources clearly to the officer: Before approving or rejecting your loan, a bank officer will visit the property for inspection. At this time, if you run a business or planning to pledge a commercial property, it is very important to explain your income details to the concerned officer. Also, let the officer know that you do not have income proof or an ITR form. The officer will take into account all the information provided by you when calculating your annual income and repayment capacity before issuing you a loan against property without income proof.

Documents Required for Applying for A Loan Against Property Without Income Proof

The list of documents that need to submit varies from bank to bank but essentially the following documents are needed:

  • Identity proof 
  • Completed application form
  • Proof of address
  • Photographs in passport size
  • Bank statements over the previous six months

So we are saying, 

Getting a loan against property without income proof and an ITR form is an uphill task. It requires a lot of convincing, explaining, and patience. As a borrower, you have several options for obtaining a loan against property without income proof. The financial industry is booming day by day and loans are available for all types of customers. Researching online and comparing various lenders who offer loans against properties helps in getting a better deal. Check your loan against property eligibility before applying for a loan. This way, you can negotiate better with loan against property interest rate.