Sometimes we face situations, wherein we need immediate cash to deal with ordeals of life. At such times, we are often left wondering about the easy ways to borrow. Thankfully, there are numerous bank products, including Personal Loans and Loans Against Property that can help you get access to the required funds.
While a Personal Loan is an unsecured loan and often entails a higher interest rate, a Loan Against Property (LAP) is a secured loan that is offered at a comparatively lower rate. Both of the credit products involve minimum hassles and fast disbursal for urgent needs.
Loan Against Property
A Loan Against Property (LAP), as the name suggests, is essentially a type of loan that is taken against a property you own. You can apply for a Loan Against Property against residential, commercial or industrial property or a plot of land.
To get hold of funds, all you need to do is to approach a trustworthy lender and ask for a loan against the property which is registered under your name. The lender will then conduct a valuation of the property, and offer you a loan, amounting to a certain percentage of the market value of the property.
The loan offered for residential and commercial properties usually varies from 60-70% of the market value of the property; and while for industrial property, the loan to value ratio often varies from 50 – 55%.
Once approved and disbursed, you can then conveniently use the loan amount as you deem fit. There is no limitation on the use of funds.
More often than not, a Loan Against Property can be availed for a reasonable interest rate ranging anywhere between 9 to 13% per annum, with a repayment tenure of up to 15 years.
Documents Required for Loan Against Property
Most lenders require a copy of following documents for Loan Against Property –
- Proof of residence (anyone)
- Ration Card
- Utility Bills like Telephone Bill, Electricity Bill, etc
- Voter’s ID Card
- Proof of identity (anyone)
- Voter’s ID Card
- Driving Licence
- Aadhaar Card
- Employer’s Card
- Proof of Income for Salaried Individuals
- Previous 6 months Bank Statement/ Passbook (indicating salary being credited)
- Salary Slip for the previous 6 months
- Form 16 for the previous 2 years
- Proof of Income for Self-Employed Individuals
- Previous 6 months’ Bank Statement/ Passbook (indicating income being credited)
- Concerned property documents
- Passport-size photographs
Availing LAP without Income Proof
As seen above, the lender will be asking you for a proof of income, largely to assess your ability to repay the loan efficiently.
In case you are unemployed or work as a freelancer, you may however find it difficult to furnish an income proof. Thankfully, that doesn’t imply that you won’t be able to procure the loan, just that you need to take a different route to do so.
Getting a Loan Against Property without proof of income can be a little cumbersome. However, with the right approach, you can conveniently find a product such as HDFC Loan Against PropertyorBajaj Finserv Loan Against Property with ease!
Here are some promising ways which can help you avail a Loan Against Property without an income proof –
Leverage Your Relationship with the Lender
Contact the bank you already have a Savings Account with. The officials at the bank have easy access to your financial history and you can leverage this for convincing the officials of your honest intentions to repay the loan. Request your bank to approve your application, even without the proof of income.
Add a Co-Applicant in Your Loan Application
If you have a family member with a regular stream of income, consider them as a co-applicant. This will ensure that your loan application gets approved in a hassle-free manner.
Meet the Loan Officer in Person
At the time of the inspection of the property you wish to pledge, you should have a one-to-one conversation with the loan officer, and clearly, state the reasons regarding your inability to furnish proof of income. Whether you are a freelancer, a salaried individual between jobs, or an entrepreneur in the initial stage of setting up a new business, let the office know your current state of affairs.
This would make it easier for the lender to assess and approve your loan application while giving due consideration to your repayment ability.
Maintain Your Savings Bank Account
In case of absence of proof of income, your Zero Balance Savings Bank Account will help the lender understand your financial standing. Hence, always maintain a healthy amount of funds in your account.
Also, it may prove to be in your interest to ensure that your average account balance is at least twice the EMI that you will be required to pay, once your loan is approved.
Consider Peer-To-Peer Lending
If needed, you can register yourself on a P2P lending platform, wherein you can raise funds through crowdfunding. However, you may have to shell out a much higher interest rate for the required funds through this medium.