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The Complete Low Doc Home Loan Guide for People without Adequate Financial Statements
Posted: Nov 14, 2014
Decoding Low Doc Home Loans
Low doc home loans (also known as low documentation loans) are a very flexible lending solution for self-employed people, property investors, people who do not work regular jobs or for new Australian families who have just moved to Australia. This loan type has taken off in recent years to assist people who have been rejected by mainstream lenders/credit providers.
Suitability of the Loan Package
Low doc home loans have allowed thousands of Australians to access a home loan. This loan is specifically suitable for people who have assets as well as income, but cannot provide adequate financial statement or tax return as documented evidence of income. Here is a list of people who are suitable for the loan:
- Self-employed people who may only pay themselves a standard wage and run their business in a way that means they fall into a lower tax bracket to avoid income tax
- Property investors who may have varied income from month to month and from year to year
- Contractors and seasoned workers who don't work regular jobs, and
- New Australians families who have just moved to Australia and may not have payslips or tax returns from the work they have been doing since they arrived in Australia
Income Verification Process
A low doc home loan enables you to self-certify your income, where you state your income (i.e. what you make) on a "Declaration" document and, the lender/credit provider will NOT verify your income by using masses of documentation otherwise required such as tax returns, BAS statements and more.
The conditions for low doc home loans are more restrictive than standard residential home loans as they provide a higher level of risk to the lender/credit provider, for example:
- You cannot borrow more than 80% of the value of the security property, and
- Any low doc home loan with a loan-to-value ratio (LVR) higher than 60% will incur a lenders mortgage insurance (LMI) premium
Factors Considered by Lenders/Credit Providers when Determining the Interest Rate for Low Doc Home Loans
Here is a list of factors that lenders/credit providers consider when determining the interest rates:
- At least 20% deposit (i.e. you do not have to show evidence of savings)
- Nature of and the security property type
- Client credit history
- Loan size amount
- Aggregate of total exposure to the lender/credit provider
- If self-employed, the period the client has been in business
- Age of borrowers, and
- The purpose of seeking finance
Seek Expert and Professional Advice
Before you start the process of obtaining loans on your own, you should first seek the expert assistance of a professionally qualified finance broker who specialises in low doc home loans. Having a specialist finance broker on your side will save you lots of time and heartache. The finance broker will negotiate on your behalf with specialised lenders/credit providers to secure your eligibility for the loan not to mention get you the best low doc home loan deal.
Truly, having a specialist finance broker on your side will make getting a low doc home loan simple for you. The expert finance broker will turn your dream of home ownership into reality. So if you are looking for a low doc home loan, don't forget to employ the services of a professionally qualified and expert finance broker.
Singh Finance is a reputed finance brokerage firm in Australia. The firm has a team of expert and professionally qualified finance brokers who will leave no stone unturned in obtaining a low rate low doc home loan for you. The team will even help you in finding suitable bad credit non-conforming home loans. So, don’t worry if you have discharged bankruptcy or default credit. Call on 0424 190 908 today.
I am a retired Accountant/Compliance & Risk Auditor married to a wonderful retired lady. I previously spent 44 years of my working life in the Westpac Group working in a number of management roles. I now work as a contractor with a reputable finance