A loan against property (LAP) is a secured loan that is offered by Banks and other financial institutions. The loan is provided against collateral/security, which could be a residential or commercial property owned by the borrower. The loan amount is based on the market value of the property and the borrower’s repayment capacity.
The Income Tax Return (ITR) is an important document that reflects the borrower’s income and tax liabilities. Lenders use the ITR as proof of income to determine the borrower’s repayment capacity. However, some borrowers may not have an ITR or may have filed a nil ITR due to their low income or tax exemptions. In such cases, they may wonder whether they can get a loan against property without ITR. In this blog, we will explore whether it is possible to get a loan against property without ITR.
Is getting a loan against property possible without ITR?
The short answer is yes, you can get a loan against property without ITR. Some lenders may offer LAPs to borrowers without ITR. However, such loans may come with higher interest rates, lower loan-to-value (LTV) ratios, and stricter eligibility criteria. Lenders may require the borrower to provide alternative income proof such as Bank statements, rent receipts, or business receipts. The lender may also assess the borrower’s credit score, repayment capacity, and other financial factors before approving the loan.
What are the alternatives to ITR for LAP?
If you do not have an ITR, there are some alternative income proofs that you can provide to the lender to increase your chances of getting a LAP. Check out the below common alternatives:
Bank statements: You can provide your Bank statements for the past 6-12 months as proof of income. The lender will assess your income based on the average monthly balance in your account and the transactions made during that period. The Bank statements can also show your savings and expenses, which can help the lender determine your repayment capacity.
Property documents: Since LAP is a secured loan, lenders may focus more on the value of the property being used as collateral. Therefore, they may require property-related documents such as sale deeds, property tax receipts, and possession certificates, instead of ITRs.
Business receipts: If you own a business, you can provide business receipts as proof of income. The lender may ask for the business registration documents and the financial statements of the business. The business receipts can show your business income, which can be considered a source of income for the loan.
Fixed deposits: If you have fixed deposits (FDs) with a Bank, you can provide the FD receipts as proof of income. The lender may ask for the FD certificate and the Bank statement showing the interest earned on the FD.
Co-applicant income: If you are unable to provide ITRs or any other income proof, some lenders may allow you to add a co-applicant with a regular income to increase your chances of getting the loan approved.
Liquid Income Program: Your creditworthiness can still be evaluated through the Liquid Income Program by examining the actual cash flow of your business if you do not have an Income Tax Return (ITR). Only self-employed professionals and self-employed non-professionals are eligible for this program. To determine eligibility for LIP, a comprehensive analysis of your financials will be conducted, which includes preparing a Profit & Loss account and a balance sheet. This report will be utilized to determine your eligible income.
In conclusion, it is possible to get a loan against property without ITR, but the availability of such loans and the loan amount may depend on the lender’s policies and the borrower’s profile.
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