Almost all the times we find lenders doing loan on basis of
your actual net income, which is the safest option. However, given the high
levels of cash transactions in many businesses, it becomes a bit difficult for
many businessmen and professionals to report high net income regularly. Low net
income does not necessarily mean that such businessmen are bad borrowers. Over
a period of time, banks have realized this. They have developed loan products
that enable a businessman or a professional to borrow for his home buying or to
raise money against his property (loan against property -LAP) without having
much to show in papers. These loan products are for those who have proven track
record of other loan repayment and/or sustainable business for many years in specific
industry and also a reasonably healthy bank balance.
Here are a few of those loan products discussed hereunder:
Other loan track: There are many businessmen, who have accessed big loans such
as such as, equipment loan, mortgage, commercial vehicle loan. They have been
repaying the existing loans without any default. In such circumstances, a bank
may look at such a borrower as a promising customer. A bank may want to lend to
such a borrower a sum equal to or less than his previous loan. For example, a
businessman borrowed Rs 50 lakh for machinery from Bank A three year back. For
last three years, he has been sticking to his loan repayment schedule.
In such a scenario, bank B may consider lending him a sum of
Rs 50 lakh or lower. Typically bank B may offer him a sum equal to a fraction
of his earlier loan, say 80%, which makes it Rs 40 lakh in the aforesaid case.
However, the catch is, the other loan should not have been closed or paid-off
more than six months ago. Bank balance: If the borrower has a healthy bank
balance and the average monthly balance can well-substantiate the new EMI for
the Housing Finance /LAP he wants to take,
this could be accepted by the lender.
EMI equalizer: Depending upon the total other loan EMI-s, a
borrower is already servicing, the new home loan/LAP can get approved. A market
average of 1.5 times of the current EMI is allowed as the total exposure.
For example, if someone is already paying Rs 2 lakh as his
all other EMI-s put together, and then he can be allowed another Rs 1 lakh as additional
EMI for the new loan, which will be an approximately Rs 1 crore borrowing. Same
loan track: During a home loan transfer, if the borrower doesn't want to go
through the hassle of doing the paperwork again, then basis the previous track
on the same loan, the transfer can happen.
The reduced EMI in the new bank can
also make for some room to borrow an additional amount as 'top-up' loan (cash
in hand) without any additional documentation.
Gross profit method: For an industry where the turnover is very
high but the profit margin is always low (trading business), the lenders do
approve of the calculation basis the gross profit and not the net. Turnover
based on industry margin: If the borrower is in a manufacturing or trading
business then a standard profit margin has been internally set by the borrower.
For example, a manufacturing unit with Rs 2 crore of turnover is expected to
make a 10% profit and thus the income can be considered as Rs 20 lakh and basis
this the loan application can be granted, even if it is not shown. For example,
if someone has a business of stationery-shop or saree-sales or sending
truckload of sands from one destination to another, it is not very sure how
much of documentation is in place. Most transactions are done without proper
bill and challan and sometimes are multiple transactions without a receipt.
However, these could be quite profitable business and safe to lend
[Source: http://www.moneycontrol.com/news/loans/how-to-borrow-large-sum-despite-low-net-take-home-income_4399801.html]
