There are many types of loans that you can avail of from financial institutions and lenders, e.g., home loans, property loans, vehicle loans, etc. A loan against property is one such loan that allows you to pledge a commercial or residential property to the lender as collateral or security. This type of loan is available for individuals with a property registered in their name. The loan amount depends largely on the market value of the pledged property.
For loans against property, all the major financial institutions and lenders rely on your proof of income to know your repayment capacity. Any applicant who opts for LAP will be asked for income tax returns and proof of income for the loan application to proceed. However, there are some tips for loan applicants who do not have income proof or ITR to submit with their loan application.Â
Hereâ€™s what you can do if you want approval for LAP without income or ITR proof:
- Apply for a Loan With Co-applicant
If you do not have any income proof to present to the lenders, this is one of the easiest ways to get approval for a loan against property. Having a co-borrower or co-applicant on your loan application will increase your credibility as a borrower. Moreover, your borrowing capacity will also increase since your co-applicant adds weight to your application. Your chances of loan approval are higher even without your income proof if you have a co-applicant backing your LAP application.
- Consider Savings AccountÂ
Most financial institutions and lenders often consider previous transactions of the loan applicant. Your banking habits, past payment and transaction records, timely repayment of old loans, etc., are vetted by the credit bureaus and agencies thoroughly. This increases your creditworthiness in the eyes of these agencies. Hence, having a savings account that can vouch for your banking records and reliable financial habits is an ideal route for a loan against property without income proof.Â
Ensure you have sufficient funds in your savings account when you apply for a loan, as this can reassure the lender of your repayment capacity.
- Connect With Your Relationship Manager
When you have a savings account, existing loan, or insurance with a bank, you are assigned a relationship manager in that bank. Relationship managers are well aware of the creditworthiness of account holders and can vouch for their financial habits too. You can speak to your relationship manager and understand everything about loans against property without income proof, which lenders entertain these kinds of requests, etc. This will help you shortlist the lenders and apply for LAP only with those lenders who are highly probable of entertaining an applicant with no income proof or tax returns.
- Communicate the Genuine Reason for Lack of Income Proof
It is very crucial to be transparent with your bank, relationship manager and the lender who is handling your loan application. Be honest about your reasons for not being able to submit income proof and not filing ITR. You can convince the bank of your income sources and have a repayment plan ready. This might help them put their trust in you and sanction a loan against property based on your repayment capacity.
- Apply for Required AmountÂ
At the end of the day, a loan against property without income proof leverages your property as collateral for the loan amount you borrow. Hence, it is crucial to apply only for the required amount, keeping your repayment capacity and income sources in mind. If you end up opting for a higher LAP then the chances of you not being able to meet your repayment schedule, delaying payments or defaulting on loan increases. This will directly risk the property you have pledged as collateral. Hence, opt for a lower-value loan and ensure you have a repayment plan in place even before the loan is sanctioned.
- Try Peer-to-peer Lending Solutions
Many peer-to-peer lending platforms take the help of crowdfunding mechanisms to generate funds. In todayâ€™s times, peer-to-peer lending platforms have also gained momentum compared to well-known financial institutions. This is also ideal for applicants who do not have income proof or income tax returns to present with their LAP application. The interest rate varies from lender to lender, but it still gives you a chance to apply for a loan even without meeting the criteria of income-proof documents.
First and foremost, any loan applicant must do their due diligence and shortlist financial institutions and lenders who will sanction a loan against property without income proof. Not all lenders are comfortable approving loans without income proof from you. However, this doesnâ€™t mean you wonâ€™t get a loan. It is vital to always assess your need, have a repayment plan in place and then approach lenders who will be able to approve your loan without any income or income tax proof.