A loan against property, also known as a mortgage loan, is one of the simplest ways to obtain a lump sum of money. You can easily borrow money by pledging your property to a bank, regardless of the reason for which you need the funds. Even if the main reason you’re borrowing such a large amount is because you’re low on cash, your application may not be given a second look if you don’t apply proper income proof with it.
If you want to get a loan without having to provide proof of income, the process is complicated and will require you to meet additional requirements. You may have to take out loans that don’t need a lot of paperwork. You can also choose a smaller loan amount to increase your chances of approval. It is also advised to compare loans against property interest rates online.
You will need to meet other conditions to get a loan against your property if you don’t have proof of income. As a creditor, you have many options for securing a loan against property without presenting evidence of income.
Often take a look at your savings bank account activities before applying for a loan, as lending institutions scrutinize bank statements. A borrower must keep a minimum balance or have ample funds on hand. Good banking practices improve the chances of getting a loan.
There are newer fundraising options to choose from in the age of digitization and consumerism, such as crowdfunding and peer to peer funding, where a group of people raise money for a common purpose.
So, why should anyone’s income be questioned while applying for a mortgage loan? The explanation is simple: a house, whether residential or commercial, is not liquid, which means it cannot be easily sold if you default on your loan. Let’s look at an example to better understand this:
Shweta is pursuing funding to expand her company (a clothing boutique), and she is considering pledging her home (where she currently resides) in exchange for some of the funds she needs. Her income was called into question when she went ahead and applied for the loan. Despite the fact that her property was worth 60 lakhs and the loan she needed was for 25 lakhs, she was told that she would only be able to get that amount if her income allowed her to repay the loan.
As a result, if she meets all of the other eligibility requirements, her loan for 25 lakhs will be accepted.
Lending institutions double-check applicants’ income proofs because collecting emis is preferable to attempting to sell the pledged land, which would take an inordinate amount of time and may not appreciate in value in the future. This will almost definitely result in a loss for the bank, which is why the application will be extensively scrutinized. Your loan will not be approved unless and until they are sure of your ability to repay it.
However, if the paperwork is right, you can get a great deal on a mortgage loan.