How to Get Loan Against Property Without Income Proof?

July 25, 2022

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When you pledge your residential or commercial property as collateral to the lender and borrow a specific amount in return, it is known as a loan against property or LAP. Simply put, it is a loan you avail on your property or on a plot. You need to ensure, though, that the property you are about to pledge is registered in your name.

Securing a loan against property is handy when you are a registered property owner. However, you must fulfil the loan against property eligibility criteria to get approval in the first go. You can easily apply for a loan against property through an online or offline process. Get in touch with the lender’s executive, and apply for the loan along with the required documents. Once you submit your loan application, lenders carry out an evaluation process to come up with the final decision.

The maximum amount you can be sanctioned entirely depends upon the market value of the pledged property. A loan against property also comes with flexible end-use. You can use it to cope with various financial obligations like a personal loan. You get the flexibility of using the borrowed amount to fund medical emergencies, finance wedding expenses, vacations, study abroad, business expansion, and much more.

Securing a loan against property becomes effortless if you meet the eligibility criteria and possess all the essential documents. When you are familiar with a loan against property and its workings, the next important step is to prepare the required documents beforehand.

Tips To Avail a LAP without Income Proof

Generally, all major banks and financial institutions count on income proof as a crucial document for approving a loan against property. When you apply for a LAP from any lender, the possibilities are they will ask for your income proof and income tax returns. The presence of such circumstances might make availing a loan against property without ITR and income proof somewhat tricky.

However, you can pin your hopes on plenty of tricks that will easily help you get LAP approval without income proof. Follow up the below-depicted tricks to make a loan approval without income proof possible:

Apply for a Loan against Property with a Co-Applicant

When you decide to apply for a LAP with a co-borrower, you unlock an array of benefits. The presence of co-applicants increases your borrowing capacity and credibility. Additionally, you take lenders in confidence about your repayment capability. Also, it enhances the chances of approval of your loan approval even if you don’t have relevant income proof.

Get in Touch with Your Bank Relationship Manager

You are assigned to a dedicated relationship manager when you open a bank account. This trustworthy person is in charge of handling all queries and associated transactions. Before applying for a loan, get in touch with your bank relationship manager and discuss the scenario. Let them know that you don’t have income proof documents, the reasons for not having them, and more.

Moreover, you will get a clear idea about whether the chosen lender provides a loan against property without income proof. You can also utilise this time to take the banking officials into confidence to increase your loan approval chances.

Let them Know the Genuine Reason for Not Having Income Proof Documents

While having a thorough discussion with your dedicated manager, be truthful. There’s no point in hiding anything, as it may result in lost confidence from their end. Tell them why you don’t have income proof documents. Elaborate with them about your income sources, how you will repay the borrowed amount, why they should lend you the said amount, and much more.

Additionally, explain why you haven’t filed ITR due to which you don’t have ITR documents to submit along with the loan application. The dedicated relationship officer will take your case further to the higher authority based on the provided information. With the help of the provided information, the bank will determine your repayment capability and percentage of risk involvement.

Look into Savings Account

During the loan evaluation process, the lender considers your previous transactions. The banking habits of the borrower play a vital role in loan against property approval. Having reliable financial habits emerges as a blessing, and savings is a plus point. It somewhat tends to increase the chances of your loan’s approval. So, when applying for a loan, ensure that you have kept sufficient funds in the account for at least one year. It adds to your credibility, making you an ideal borrower from the lender’s perspective.

You can even count on a loan EMI calculator to determine what your monthly instalments would look like. Additionally, try saving twice the monthly instalment amount to improve your chances of loan approval.

Apply Only for the Required Amount

One thing that you should never forget is that you will have to repay the borrowed amount for years. So, never jump for a loan amount higher than your current requirement. Make sure you borrow only the amount you require to meet your financial obligation. Applying for a higher loan amount may result in the rejection of your loan application.

Banks and finance providers stick to the Loan to Value (LTV) ratio to determine the amount that can be approved and the borrowing capability. If you apply for a loan with a higher amount beyond your repayment capabilities, the chances of rejection of your loan increase. Applying for a low-value loan may help you get your loan against property without ITR and income proof approved.

Rely on Peer-to-Peer Lending

With changing trends across the financial sector, borrowers stick more to peer-to-peer lending. Such platforms usually stick to a crowdfunding mechanism for generating funds. Then the generated amount is disbursed to the most eligible borrowers of the forum. However, the applicable interest rate varies from one borrower to another based on lending criteria. So, if you don’t have reliable income proof and your loan application gets rejected, count on peer-to-peer lending.

Best Banks for Loan Against Property

Here is the list of the top four banks that provide a loan against property at competitive interest rates.

State Bank of India (SBI) Loan against Property

One of the major public sector banks, SBI provides a one-stop shop for an array of banking products and services. The following table will give you the relevant information about SBI loan against property, including the interest rates, processing fee and much more.

SBI Loan Against Property 

LAP Interest Rate Interest rates starting from 10% 
Age Limit At maximum, an individual can be 70 years old while applying for a LAP
Loan Processing Charges 1% of the approved loan amount in addition to applicable charges
Loan Repayment Tenure Flexible repayment tenure of up to 15 years
Maximum Loan Amount  Maximum loan amount of INR 10 lakh
LTV Ratio At maximum, up to 65%

Note: The interest rates mentioned above and associated fees can change as per RBI’s repo rate and at the sole discretion of the bank. You might have to pay GST with other service taxes while securing a loan against property from the bank.

HDFC Bank Loan Against Property

One of the top private sector banks, HDFC provides its versatile client base with a range of home loans, including a home construction loan, a loan against property (residential and commercial), plot loans, etc. The bank also offers assistance in purchasing real estate properties from other development agencies, like the Maharashtra Housing and Area Development Authority and the Delhi Development Authority, among others. HDFC offers loan against property to salaried employees and self-employed individuals.

HDFC Loan Against Property 

LAP Interest Rate Starting from 9.65%
Maximum Loan Amount At maximum, up to 60% of the property’s market value
Missed payment and Late charges 2% of the overdue EMI will be paid as late fee per month
Charges for Bounced Cheque INR 550
Pre-Payment Charges 2.5% of the outstanding loan amount (at maximum)
Repayment Schedule Charges INR 200/schedule
Charges associated with Cheque Swap INR 500

Note: The indicated interest rates, fees, and charges could vary. HDFC bank and the Reserve Bank of India have complete discretion over ROIs. In addition to the fees mentioned, GST and service tax will be charged.

In addition to loan against property, HDFC bank provides the following housing products:

  • HDFC home improvement loans for renovation purposes
  • House extension loan
  • Housing finance for farmers and agriculturists
  • HDFC rural housing finance.

TATA Capital Loan Against Property

Well-known banking and investment firm Tata Capital provides an array of financial products and services to cater to versatile client requirements. In addition to consumer loans, and commercial and infrastructure financing products, it offers a loan against property at attractive interest rates. Additionally, you can secure a loan from Tata Capital in no time with a hassle-free and paperless procedure.

TATA Capital Loan Against Property

LAP Interest Rate Starting from 10.5%
Maximum Loan Amount INR 10 lakh
Processing Fee and Charges Usually, 1% of the approved loan amount
Loan Repayment Tenure Flexible repayment tenure of up to 15 years
Foreclosure or Preclosure Charges 4% of the outstanding loan amount in addition to GST
Documentation Charges INR 5000 plus GST
Part-payment charges Not applicable if you pay 25% of the outstanding amount as part-prepayment in a year

Note: The indicated interest rates, fees, and charges could vary. Tata Capital and the Reserve Bank of India have complete discretion over ROIs. You may have to pay applicable GST and service tax to secure a loan against property from Tata Capital.

DHFL Loan Against Property

Dewan Housing Finance Corporation Ltd. (DHFL) is one of the highly established housing finance firms. It provides banking products and services at attractive interest rates making financial products fit within the budget. In semi-urban and rural areas of India, DHFL also gives the Low-Income Group (LIG) and Mid-Income Group (MIG) sectors of the population access to affordable housing financing. Housing finance and other associated products, such as a loan against property, are available for salaried employees, self-employed applicants, limited liability partnerships, private ltd companies, proprietorships, and partnership firms.

DHFL Loan Against Property

LAP Interest Rate The offered interest rate depends on the individual’s credibility. 
Processing Fees and Charges Usually, 2% of the approved loan amount in addition to GST
Loan Repayment Tenure Flexible repayment tenure of up to 15 years
Part-Payment Charges Not applicable
ChequeBounce charges and ECS bounce charges Rs. 500 + GST
Applicable CERSAI Registry Charges INR 50 to INR 5 lakh
Conversion Charges 0.5% of the remaining loan amount
Levied Stamp charges As per the State Law and State Stamp Duty Charges

Note: The above-depicted interest rates and charges could vary. The Finance Corporation and RBI have complete discretion over ROIs. In addition to applicable fees, you will also have to pay GST and service tax.

Documents Required to Get a LAP without Income Proof and ITR

Lenders usually ask for specific documents to determine the credibility of the borrower. In most instances, borrowers don’t have all the essential documents such as income proof and ITR. If you are one of them, you need not worry, as lenders also provide a loan against property without income proof and ITR.

To help you better, here’s the list of documents you need to be prepared with to secure a loan against property without income proof:

  • Identity proof including Aadhaar Card, Voter ID Card, Passport
  • Residence proof such as Passport, Driving Licence, Family ID, Ration Card
  • Bank Details and Account Statement
  • Duly filled Form 16
  • Property Documents, including Registration Certificate and Property Deed

Importance of Income Tax Return (ITR) to Avail of a Loan

ITR or Income Tax return acknowledges that you have filed returns for your annual gross salary for a said financial year. ITR is an essential document you might require for numerous tasks, including securing a loan or justifying business transactions.

When you apply for any financial product, including a loan against property, ITR documents must be provided to prove you have filed your returns. The following points highlight the importance of Income Tax Returns to avail of a loan:

  • Lenders consider ITR documents as a vital document to determine your annual income and repayment capabilities. Usually, finance providers ask for the ITR of the last three years for processing your loan application. Some lenders reject a loan application if the borrower fails to provide the same.
  • It reflects the financial stability of the borrower and stable income levels. It helps lenders figure out your financial history, whether you have a static income source, what your monthly expenses look like, whether you will be able to pay monthly EMIs, and much more.
  • If you file ITR, the lender will consider you a genuine and risk-free candidate. Not filing ITR makes you irresponsible from the lender’s perspective. So, the possibilities are your loan application might be rejected.
  • If you’re not a working professional and run your own business, filing ITR and having related documents become of utmost importance. If you fail to do so, you may not expect your loan against property without ITR and income proof to be approved. Having an Income Tax Return document will allow the lender to access your creditworthiness and discover that you never fail to pay your taxes on time.

Conclusion

Not all lenders issue a loan against property without an ITR and income proof. Getting a LAP can be difficult without income proof, but it will be a breeze with the abovementioned tips. Instead of looking into more and more lenders, plan on convincing your current lender to approve a loan against property without income proof. Before doing so, you must learn about the eligibility requirements, which may vary from lender to lender, to improve your chances of loan approval.

Frequently Asked Questions (FAQs)

Can I get a loan without income proof?

Yes, you can get a loan without income proof if you have genuine reasons for not having income proof. But, you need to ensure that you have all other required documents. Additionally, you can count on a co-applicant to get a loan against property without income proof.

Which type of loan does not need income proof?

An unsecured loan like a credit card, personal loan, student loan, etc., doesn’t require income proof. You can negotiate with the lender to get approval if you don’t have income proof.

Can I get a Loan Against Property without ITR?

Yes, you can get a loan against property without ITR. However, it entirely depends on the lender.

Tushar Gautam is a content writer inclined to enlighten his readers about the world of finance through Urban Money.

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