Introduction to Property Buying

All you need to know about Liquid Income Program

All you need to know about Liquid Income Program

Liquid Income Program is a way of assessing an individual’s credit worthiness by looking at the actual cash flow of the business. In many cases, it is difficult to assess the credit worthiness based on their previously filed ITRs due to several reasons such as a recent scale-up of business, reduced awareness about maintaining financial accounts, improper maintenance of accounts, lack of professional responsibility of the Chartered Accountant with respect to reporting of the true financial status of the business, etc.

A complete assessment of the financials of the borrower will be performed to assess eligibility for LIP. In addition,  a complete verification process of the office/ factory premises of the individual will be carried out. Moreover, the income-generating capacity of the borrower will be determined by verifying the records for the current period. An estimated Profit & Loss account along with a balance sheet will be prepared. This report will be used for ascertaining the eligible income of the borrower. Any borrower whose business, investment, and working capital can be verified, is eligible for the Liquid Income Program.

Features and Benefits

The Liquid Income Program has several features and benefits. Here are the 4 key benefits of LIP.

  • Higher Loan Amount – In case of un-audited financials, maximum Home Loan amount will be Rs. 50 Lakhs and in Loan against Property maximum loan amount will be Rs. 35 Lakhs under this program.
  • Minimum Documentation – Under this program, minimal documentation is required to assess credit and avail of a loan like :
    • Last 2 years ITR and computation along with Balance Sheet and Profit & Loss.
    • Latest 12 months bank statements of the main business account whose Average Banking Balance to be considered and all other such accounts where loan repayment is ongoing.
  • Higher LTV (Loan to Value Ratio) – Up to 60% of the property’s market value in case of Loan against Property and up to 90% of the property’s market value in case of Home Loan.
  • Flexible Loan Tenure – The tenure of the home loan under the Liquid Income Program can be extended up to a maximum of 30 years.

Eligibility Criteria

To be eligible for this program, below are the list of few criteria that need to be met :

  • In the case of Loan against Property, the property should either be used as a self-occupied residential property or a self-occupied commercial property.
  • This program is eligible only for self-employed professionals and self-employed non-professional customers.
  • In the case of Loan against Property, the property should be 100% built-up.

In a Nutshell

Liquid Income Program financially helps small business owners with housing loans in an efficient manner. Ensure to have the required document list ready to expedite the entire process. In addition, all self-employed professionals and self-employed non-professionals can apply for Liquid Income Program.

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