Currently, the Indian financial market offers a plethora of options for individuals who are in need for monetary assistance. There are numerous financial institutions that provide both short and long-term credits as secured and unsecured advances to eligible applicants, helping them bridge their monetary shortcomings effectively.
Mortgage loans are one such credit option offering a lump sum amount of loan to customers against a mortgaged property. Credits like loans against property has become one of the most popular methods of secure financing, as these involve significantly lower risk when compared to unsecured loans for lenders, and are offered with long repayment tenors and at attractive interest rates.
Brief Insight on Loan Against Property
● Rs.2.5 lakh crore – Total portfolio of loans against property in India. Almost half of which, or approximately Rs.1.2 lakh crore, is with NBFCs and Housing Finance Companies.
● 33% – Growth witnessed in the number of loan against property accounts (till September 2018).
● 1.6 million – Total active credit accounts in existence across the nation.
Another benefit of availing a property loan is that it’s easy to meet eligibility criteria.
Applicants only have to know the essential things before applying for a loan against property. They would also have to submit some papers, like KYC documents, address proof, and income proof like Income Tax Return (ITR) to apply for a credit.
Submitting all the documents prerequisite by the financial institution is essential to successfully apply for a credit. However, one can apply for a loan against property without ITR by following some simple steps.
Applying for Credit without IT Returns
There are several situations when an individual might not have Income Tax Returns to submit while applying for a loan against property. He or she might earn below the exemption limit, in which case they are not required to file ITR every year. In such situations, an applicant can follow the below-mentioned methods to apply for a credit.
● Present Other Valid Proof of Income –
Lenders require proof of income to determine the repayment capacity of a borrower. It is an essential step of the loan against property process and is mandatory for every applicant. Failing to submit all the necessary documents is one of the most crucial things to avoid while availing a loan against property.
However, individuals who do not have ITR can provide additional proof of income, like salary slip for previous months, bank account statements of the last 6 months, etc. These will allow a lender to understand an applicant’s monthly income and repayment capability.
● Maintain a Good Credit Score
Maintaining a healthy credit score will ensure a better chance of approval while applying for credit without ITR. Credit score of 750 or higher indicates that a borrower is careful with his or her finances, and has been able to repay all their previous debts on time without defaulting.
Lenders prefer applicants who have a good credit history as it reduces the risk associated with lending and repayment by a significant margin. It is also one of the necessary eligibility criteria applying for a loan against property and can help avail lower property mortgage loan interest rate.
● Opt for a Lower LTV
Lenders usually allow a loan to value (LTV) ratio ranging from 60% to 90% of the current market value of a property. An applicant without ITR can apply for a lower LTV to increase the chances of approval.
● Apply with a Co-Signer
Individuals who need to apply for a loan against property without ITR can do so along with a co-signer who has a healthy credit score and a stable source of income. It increases the chances of approval as it provides additional assurance to the lending institution.
There are several financial institutions that provide such credit to eligible applicants including both Government-backed as well as private Housing Finance Companies. Organisations offers Loans against Property at competitive interest rates, easy to meet eligibility criteria, and minimum documentation.
Moreover, they also provide pre-approved offers to existing customers that simplify the application process and help save time. Such offers are available on both secured and unsecured credits, including loans against property, home loans, personal loans, business loans, etc. You can check your pre-approved offer by sharing only some essential details online.
Following the above mentioned steps can help secure a loan against property even if the applicant does not have Income Tax Returns. It will also improve a borrower’s creditworthiness, and ensure easy approval and disbursal of credit.