Low Doc Home Loans
Low Doc Home Loans
Low doc home loans are a potential option for Self Employed borrowers who do not have the required documents to verify their income. This may be because the business has only recently been setup or because the accountant has not prepared the most recent tax returns. They can be useful in the instance that your income has increased since you completed your last tax returns. A low doc mortgage can be a more straightforward process if your financial situation is overly complicated.
What is a low doc home loan?
Low doc home loans are for borrowers who are self employed or small business owners who don’t have access to the documents usually required for a conventional home loan. Low doc home loans require less documental proof of financial history and income, but a lender will still require proof that you can pay bills on time. In general, low doc lenders don’t offer interest rates as competitive as traditional home loan rates as it’s considered more of a risk to the lender. if you’re having trouble obtaining a low doc home loan, we recommend getting in touch with one of our specialist lenders for some home loan advice.
Verification of Income
All low doc home loans will require a borrower to declare their current income but there will not be a requirement to provide tax returns and financial statements to verify income. Instead a borrower will need to verify their income with alternate documents which normally involves on or more of the following;
Letter from your Accountant
Recent bank statements from your business account
Recent BAS statements
What Lenders offer Low Doc Loans?
Low doc home loans are widely available these days, but the guidelines and costs will change considerably between lenders. Many mainstream lenders will offer a low doc mortgage and there are also a number of low doc lenders that focus on alternate lending solutions such as low doc loans.
A lo doc loan is a unique area of lending and it is important to get the right advice because the guidelines, fees and charges and the interest rates can vary considerably. It is possible to get low doc home loans that are very similar in pricing to normal home loan products, but the pricing can increase significantly with certain lenders and in certain situations. During an initial assessment we can provide accurate information about the most competitive loc doc home loans for your situation.
Low doc refinance home loan
It is possible to apply for a low doc refinance home loan, though additional requirements will be needed to obtain one. Big bank lenders are less likely to agree to a low doc refinance home loan as its considered high risk, but there are several low doc lenders who will agree to a refinance loan under certain criteria.
In addition to bank statements, BAS statements, and a letter from your accountant, you will likely need:
- A clear credit history
- Proof that you can made payments on time
- Borrowing must not exceed over 80% of the property value
Lending Requirements for Self Employed Home Loans
A no doc or no documentation loan is a loan which does not require any proof of income or affordability. The National Consumer Credit Protection Act (NCCP) prohibits no doc loans for any purpose that is personal, owner occupied or investment in residential property.
In simple terms this means that a no doc loan must be either for business purposes or for investment purposes (other than investment in residential property) such as an investment in commercial property.
This type of lending is normally done on a short term basis such as a loan term of 3 months to 2 years. Sometimes these loans will have a requirement for interest to be paid in advance for the loan term given that a borrower may not be able to afford ongoing monthly repayments. It is important to have a specific strategy in mind to repay the loan in full. This normally involves sale of an asset to repay the loan in full or refinance to a traditional loan facility when the borrower may qualify with a mainstream lender. This type of lending will have a higher interest rate due to the higher risk and generally is only available to 65% of a property valuation