Everyone faces a monetary crisis at some point in their life. There is always a long list of duties and responsibilities to fulfil that demand money. One cannot fulfil these responsibilities by swiping their credit card. Taking a loan against your property may, however, prove to be helpful. The demand for loans against property has increased with time, primarily because these loans are more affordable than any other personal loan. Getting a loan sanctioned without showing ITR is difficult but not impossible.
Loan Against Property: What Is It?
A loan against property(LAP) is a secured credit option. It is sanctioned by keeping an asset (residential or commercial) as a mortgage with the lender. The current property valuation decides the amount of potential loan that will be sanctioned.
Income Tax Return (ITR): What Is It?
An income tax return is a form that shows your gross taxable income for a given financial year. This form also declares net tax liability and claims tax deduction. It is mandatory to file an ITR for individuals earning a certain amount.
Tips to Get a Loan Against Property Without ITR
The following tips will improve your chances of availing of a loan against property without an Income Tax Return.
- Connect with your relationship consultant: All savings account bank holders are allocated a relationship consultant. They can guide you through the entire process of availing of a loan against a property. An honest conversation with them regarding the absence of income proofs is necessary to assure your lender that you will be able to repay the loan in time.
- Monitor your bank activities- Lending institutions scrutinize bank statements before sanctioning any loan. Try to keep a high average monthly balance with regular savings. This will increase your chances of getting a LAP loan approved.
- Justify reasons to not have income proof- Give a proper explanation with a valid reason to the concerned body regarding why you did not file your income tax return in the current or preceding year. If the lender is satisfied with your explanation, they will decide on the previous year’s income.
- Select a Lower Loan-To-Value Rate (LTV)- The percentage of your property’s market value that the lender offers as a loan is a loan-to-value ratio. If the lender provides a high LTV of 80%, the borrower must meet only 20% of the expenses. Choose a lower loan-to-value percentage and make higher down payments to increase your chances of getting your loan approved without income evidence.
- Apply with a co-applicant- You can avail of a loan against property with an earning member of your family as the co-applicant.
Essential Documents
- Duly filled application form by the applicant
- Applicant’s identity proof- Aadhaar Card, PAN card, Voter ID Card or Driving License
- Address proof of applicant- Aadhaar Card, Voter ID card, Passport, Ration Card or Utility Bills
- Passport size photographs
- Applicant’s bank account statement for the last six months
- Cheque issued for processing the fee payment
Tips to Avoid Mistakes When Availing of LAP
- Loans against property are secured loans, but it is essential to keep track of your credit score since lenders check your credit score while sanctioning your loan application.
- Disbursal time is a critical factor when it comes to LAP. Since a high amount is sanctioned, thorough verification is needed. The disbursement takes time, so make sure to enquire your lender about the expected time of loan sanction to plan your funding correctly.
- Always choose a tenor analyzing your financial status. Never opt for an unnecessary longer tenor if you can repay it in a shorter duration.
- Use a mortgage loan calculator to calculate your EMI before you take a LAP.
Bottom Line
It is quite a task to get a loan against a property without ITR or income proof. It is a lengthy process, and you need to fulfil additional requirements. However, know that it is not impossible to get a loan against property without ITR. All you need to do is take the right steps to make your lender understand that you can repay a loan.
Additional Read: IRS Income Tax Help | How IRS Tax Help Works Process Is Not Working
