Loan Against Property Without Income Proof and ITR

The process of sanctioning a loan against property (LAP) is thorough and detailed. It involves scrutiny of an applicant’s eligibility and evaluating all the essential documents required - right from KYC to income proof, credit reports and property documents.

These documents help lenders verify an applicant’s creditworthiness and evaluate how much risk is associated with sanctioning a mortgage loan to the borrower.

Thus, documents such as income proof and Income Tax Returns (ITR) are mandatory in the mortgage loan application and approval process. If it is difficult to produce proof of income or ITR documents due to some reason, how can one apply for a loan against property without income proof or ITR?

Well, there are some workarounds to obtaining a LAP without ITR or proof of income. These workarounds include leveraging informal income proof, providing Kachcha income proof, relying on your bank account, using a co-applicant, and improving your credit score. This article explains the same in detail.

Here are some tips to avail of a mortgage loan without income proof:

Apply with a co-applicant

If you do not have income proof, you can always apply with a co-applicant for a swift loan against property approval. Getting a mortgage loan or even a housing loan without income proof is not impossible with a highly eligible co-applicant who has sufficient income proof and ITR documents. 

Through a joint application, you can get property loan approval even without income-proof documents. In such cases, the co-applicant will become the primary applicant. There are other benefits of having a co-applicant, including the sanction of a larger loan amount because of the improved creditworthiness of the application.

Apply for a smaller loan amount

You can apply for a low Loan to Value (LTV) ratio to improve the chances of getting a loan without proof of income proof. Taking less money from the lender as a loan against the property amount would reduce your overall obligation. It will also improve your chances of getting a faster loan approval without having to submit necessary documents like income proof or ITR.

In such a case, the risk involved for the lender is lesser and they would be more stringent to sanction the loan. However, make sure you save enough money to afford a larger down payment without dipping into emergency funds. You can use an online loan against property EMI calculator to help you make an informed decision.

Leverage existing banking relationship

Another way to get a LAP without ITR or income proof is to contact your existing financial institution’s officials or customer relationship manager and explain your situation. Assure them of your capability to repay the loan by providing adequate documents in future.

Apply with the financial institution where you have a savings account. Being a loyal customer over the years, you can get help from the officials in obtaining a decent loan amount without a plethora of documents.

Special loan programs

If you do not meet standard loan against property eligibility criteria, do not have a formal revenue stream or receive the majority of your income in cash, several financial institutions introduce special funding programmes. Contact your bank and ask if they have any such schemes.

Explain your income 

Before loan approval or rejection of your loan application, the lender will send an officer to your property for inspection. During that time, you can explain your income source properly. For example, if you run a business or can pledge a commercial property, then provide accurate income information to the concerned officer. Also, tell the officer about not having income proof or ITR. The officer will keep that information in mind when calculating your annual income and judging your repayment capacity.

Following are some common loan against property documents required if you are applying for the loan without income proof and ITR:

• Identity proof: This may include any government-issued identification card such as a valid passport, driver's license, etc.
• Address proof: Recent utility bills or bank statements showing your current address.
• Credit report: A copy of your credit report so that the banks can assess your creditworthiness.
• Asset documents: If you are applying for a secured loan like a loan against property, you will have to provide documents related to the asset being mortgaged as collateral, such as the title or registration papers of the property.
• Bank statement: Bank statements will be required to show your competence in paying back the loan amount.
• Guarantor information: If you are co-borrowing a loan with a guarantor, you will have to provide their personal as well as financial information, such as proof of identity and income.

Business documents: You will need to share business profit & loss sheets with the bank. This is applicable in case you are using the business profit as your source of income.

To be eligible for a loan against property, lenders will typically look into your credit score apart from assessing other criteria. To get a mortgage loan, you must maintain a CIBIL score of at least 600. Having a zero or poor CIBIL score makes it challenging to secure a loan even if it is backed by an asset. The key to resolving this issue is to work on increasing your credit score. It may take longer, but a loan against property without CIBIL is not a great choice either. 

Tips to improve your CIBIL score:

• Make consistent and timely payments of all your existing credit card dues and loan EMIs.
• Reduce your credit utilization by keeping your credit card balances lower than your credit limit.
• Monitor your credit report regularly for errors or suspicious activity.
• If you find any errors in your credit report, dispute them and get them resolved promptly.

Here is how to apply for a loan against property without CIBIL:

• Research lenders and identify those who specialise in mortgage loan for individuals with low or poor CIBIL scores.
• Gather property documents, income proof, and all other necessary paperwork.
• Apply online or physically (by visiting the branch) by providing the required information.
• Lenders will conduct property valuation of your property and verification of income and other information.
• Once your loan application is approved by the lender, the loan amount will be disbursed.