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When you want a loan from a bank or a money lender, they have a list of papers they need from you. This helps them decide if they should give you the loan. One of the main papers they ask for is the Income Tax Return (ITR) from the last 2-3 years. This paper, often referred to as earning proof, shows the bank how much money you make. If you fill your ITR every year, you’re in a good position.
But, if you’re seeking a loan against property without income proof or a home loan without income proof, it can be challenging. And if you haven’t done it recently, especially if you work for yourself, the bank might say no to your loan application.
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But, Basic Home Loan has some tips to get a loan for self employed without ITR or even a business loan without ITR. But before that let’s under the basics:
A Loan Against Property (LAP) is a way to borrow money using an asset you own, like your house or land. It’s a method to tell the bank, “I have this property. Can I get some money and use my property as a guarantee I’ll pay back?” The bank evaluates your property’s worth and, if all checks out, they’ll lend you money based on its value.
Suggested read: Business loan vs loan against property
Applying for a loan against property (LAP) without traditional income proof and Income Tax Returns (ITR) can be challenging, as lenders typically require these documents to assess your ability to repay the loan. However, there are alternative documents you might use to demonstrate your financial stability and creditworthiness. Here’s what you might need to provide:
When you’re trying to get a loan, a bank official will visit to inspect the property you’re offering as security. If this property is connected to your business, it’s vital to clearly share details about your income. If you’re missing standard documents like income proof or the ITR form, it’s important to be upfront about it. This clarity ensures the bank can accurately gauge your financial stability and repayment potential. For those considering a term insurance without income proof, similar transparency is essential. This can also affect your home loan processing time to some extent.
Suggested read: Co-borrower vs. co-applicant
It’s crucial to file your Income Tax Return (ITR). If you missed filing it last year, be honest with the officer about the reasons. For added assurance, it’s wise to seek advice from a tax expert and ensure your current year’s taxes are filed promptly.
For a Loan Against Property (LAP) application, lenders review your bank activities. A steady account balance and responsible banking can enhance your loan approval chances.
When you want a loan, the bank needs to know if you can pay it back. One way they check this is by looking at your Income Tax Returns (ITR). This document shows how much money you made in a year. Even if you didn’t earn much and didn’t owe any taxes, it’s a good idea to file an ITR that says “NIL” or no income.
The bank looks at the money you report in your ITR to decide if you can handle a loan. The ITR tells them about all the money you earned from different places. Some banks also want to see your Computation of Income Statement (COI) because it gives more details about your money. That’s why many banks ask for your ITR from the past two or three years before they give you a loan.
Yes, it’s possible, but the process might be longer and may require meeting additional requirements. Some loans don’t demand a lot of documentation. Choosing a smaller loan amount can also increase your chances of approval.
In some cases, yes. However, the person must have a reliable source of income to make the loan repayments.
Typically, loans against property don’t cover 100% of the property’s value. Most lenders offer up to 70% of the property’s market value.
Yes, you can show a loan against property as a liability in your financial statements or when required.
Some no-doc home loans or P2P lending platforms might not require traditional income proof.
Eligibility typically depends on the property’s market value, the applicant’s repayment capacity, and the lender’s specific criteria.
The main disadvantage is the risk of losing the property if you fail to repay the loan.
It can be a good idea if you need funds and have a clear repayment plan. However, it’s essential to understand the terms and risks involved.
Published on 27th September 2023
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