How to Get a Loan Against Property Without Income Proof?

When you apply for any kind of credit, be it a home loan, personal loan, or loan against property, the probability of your application being sanctioned greatly hinges on whether you meet the lender’s eligibility criteria. All lenders in India have specific requirements for different kinds of loans. However, one of the most critical factors that all lenders consider is income. 

All the lenders, be it a bank or an NBFC (a non-banking financial company), require the loan against property or LAP applicants to provide proof of their income. This is to mainly assess the risk involved in sanctioning their loan application. However, sometimes, it can be difficult for the applicants to submit proof of income for different reasons. So, in this guide, we discuss how you can apply for a loan against property without proof of income. But first, let us understand what a loan against property is.

 

What is a loan against property?

A loan against property is a type of secured loan wherein you need collateral. To get the funds, you must pledge any property as security with the lender. The property could be a home, a commercial property, or even a plot of land. Some lenders even accept financial documents like share certificates and FD (Fixed Deposit) receipts as collateral. 

The maximum amount you can get by pledging the property mainly depends on its current market value as assessed by the lender. But generally, the lenders sanction only a certain percentage of the property’s value as a loan. This can vary from one lender to another and usually ranges between 50% and 80%. 

Another significant feature of LAP is that once the lender sanctions the loan and disburses the amount, you can use the money for any legal purpose. Unlike other loans, the lenders do not impose any restrictions on the end usage of the loan. 

 

Getting a property loan without income proof

As mentioned earlier, financial organisations require proof of income before sanctioning your loan application. However, it may be hard for you to submit proof of income due to the nature of your work/profession, like if you are a freelancer. In such a situation, the financial organisations will determine your eligibility based on your income, the value of the property you offer as collateral, and other factors. 

• Provide proof of alternative income

If you don’t have a traditional job with a regular salary or business income, you can give your lender proof of other income sources (if any), like income from rent, dividends earned from investments, etc., to showcase your strong financial standing. This will also give the lenders the confidence that you have the financial means to promptly repay the loan. 

• Use a guarantor 

Another effective way to get a property loan without income proof is to get a guarantor. A guarantor is the person who can sign the loan documents on your behalf and agree to repay the loan if you fail to do so. 

In such cases, the financial organisations sanction the loan based on the guarantor’s income and creditworthiness. You can ask any of your family members with a regular job and a high salary to act as a guarantor for the loan. 

But remember, if you fail to repay the loan, the lender will hold the guarantor responsible for the repayment, and they will face the repayment burden. So, make sure to make the monthly payments on time. 

• Maintain a good credit score

Lenders consider your income and financial standing, past repayment history, and current credit score in addition to your income and financial standing to determine your eligibility for a loan against property. Your credit score reflects your creditworthiness and acts as a report card for how well you manage your finances. 

The credit score assumes even more importance when trying to get a loan without proof of income or income tax return (ITR) documents. So, before you approach any lender for LAP, it is advisable to check your score and try to maintain a high score of at least 750 or more. 

This will help you gain the lender’s trust as a responsible borrower. You will be more likely to repay the loan on time and have better chances of getting the loan sanctioned. 

• Explain your situation to the lender

If you don’t have any income-proof documents to avail of a loan against property, don’t lose hope yet! You can still get the loan sanctioned. All you need to do is discuss your situation with the lender and explain why you don’t have proof of income or ITR documents. If you can provide them with a valid reason and, at the same time, showcase to them that you have the financial capacity to repay the loan, you may get the sanction. 

 

Documents required for getting a loan against property without income proof

Although proof of income is important to avail of a loan against property, you must still comply with documentation requirements if you don’t have the same. You must be able to submit the following documents. 

• Proof of identity 
• Proof of address
• Guarantor information
• Property-related documents
• Business-related documents (as applicable)

*Please note—The list of documents mentioned above is only indicative. The actual documents required may vary from one lender to another, and the lender may require you to provide additional documents. 

 

Conclusion

Getting a loan against property is a great way to leverage your existing assets and obtain funds to meet your emergency financial requirements. Getting a loan against property without income proof may be challenging, but it is not impossible. Consider the tips in this guide to increase your chances of getting a loan. 

Make sure that you apply for a loan with only credible lenders who offer competitive interest rates, minimal documentation requirements, and a simple application and approval process. This will greatly help you have a hassle-free borrowing experience.