Almost all of us have had a financial crisis in our life at one point or another. We always have a never-ending list of things-to-do that requires money and often we ask ourselves “Where do I get the money from?”. During such situations, apart from swiping your credit card, you can consider taking a personal loan. If you are hesitant to avail a personal loan but have a property registered in your name that you want to sell, why not pledge it instead?
A loan against property(LAP) is not a complicated term. It is self-explanatory. It is a type of loan that is taken against a property you own. A property can be a residential building, commercial building, or just a plot. If you have a property registered under your name, you can approach lenders asking them for a loan against your property. The lender will assess the market value of your asset and will sanction the loan if the title is clear. The lender will approve a certain percentage of the market value of the property as a loan which you can use for any purpose.
People take loan against property for many reasons like expanding your business, education, studying abroad, taking a vacation, or for medical treatments.
The bad news is that most of the leading banks in India will ask you for income proof even if you submit your property documents as collateral to be sure that you will be able to repay them promptly. However, if you are a freelancer or unemployed at the moment and cannot furnish income proof whatsoever, these tips might help you out. You can check your loan against property eligibility using one of the numerous online calculators available online before applying for one.
Tip 1: Try Talking To Your Relationship Manager
If you have a savings bank account with any bank, a relationship manager will be assigned to you. This manager will be your point of contact for any concerns you might have. If you do not know who your relationship manager is, walk into your bank and one of the officers will connect you to the right person.
Once you have met the right person, try assuring that you will make your payments promptly and ask them if they can process your loan without income proof document or ITR.
Tip 2: Add A Co-Applicant
If you have a family member with a valid credit history and a regular income, consider adding them as a co-applicant. Adding a salaried co-applicant will increase the chances of your loan getting approved.
Tip 3: Explain Your Income Clearly To Your 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 ITR form. The officer will take into account all the information provided by you when calculating your annual income and repayment capacity.
Tip 4: Justify Why You Do Not Have The Necessary Documents
Filing ITR is very important. If you haven’t filed it for the previous year, please explain the reason genuinely to the officer. Also, to be on the safer side, consult a tax consultant right away and file your taxes for the current year.
Tip 5: Check Your Savings Bank Account
While approving a loan against property, the lender will take a look at your banking habits. If you have good banking habits and have always maintained funds in your account, the chances of your loan being approved increases. Make sure that your average bank account balance is twice your proposed EMI [Use HOME LOAN EMI CALCULATOR to compute your Home Loan EMIs.] .
Tip 6: Choose Lower Loan To Value
Loan to Value(LTV) indicates the percentage of the loan that the bank will lend. For example, if the LTV is 90%, the borrower has to pay the remaining 10% while 90% is funded by the bank. If you do not have income proof or ITR forms, try requesting the bank to offer you a lower LTV. Do not forget that in choosing lower LTV, you will land up shelling the remaining from your pocket.
Tip 7: Consider Peer-To-Peer Lending
Peer-to-peer lending is increasingly popular these days. In a P2P platform, funds are raised through crowd-funding which will be disbursed to the eligible borrowers with an interest rate. You may be charged a high interest rate based on the risk factor under P2P lending. If you do not have valid income proof or ITR information, this could be an option.
Getting a loan against property without income proof and ITR form is an uphill task. It requires a lot of convincing, explaining, and patience. 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 loan against property helps in getting a better deal. Check your loan against property eligibility before applying for a loan. This way, you can negotiate better.
Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.