What is a Low Doc Home Loan?

Low Doc (low document) loans are flexible mortgages for self – employed Australian borrowers. These can be useful for freelancers, contractors and other people who do not work regular jobs and thus, can’t supply payslips, financial statements or tax returns as verification of income.

Low Doc Home Loans allow you to state what you earn with an income verification document. You will not have to give PAYG payslips or tax returns as evidence of your income, but that does not mean it’s easier to get the loan approved.

The lender will still do their usual credit scoring, as well as confirm that you’re suitable to pay for your loan, based on the income you’ve stated on your form.

With a low doc loan you still be needed to give some paperwork, such as an accountant’s letter or bank statements to confirm your declaration of income.

What are the main differences between low doc home loans, compared to regular prime home loans?

• A lower maximum loan to value rate ( LVR) you can generally only adopt up to 85 % LVR.
• A higher interest rate to compensate lenders for the increased risk.

Low doc home loans can be a good option for self – employed borrowers, but since they have higher rates and costs, you should take the time to work all the numbers out using a loan calculator before you apply.

Am I eligible for an Low Doc Home Loan?

These types of loans are typically offered as a way of meeting the conditions of small business owners, freelancers and other people who hold an ABN. They’re designed for self – employed people who else wouldn’t be suitable to get a home loan due to not being able to provide 2 years of lodged tax returns. Still, you will need a self – employed home loan if you work for yourself. You may know how important you earn over the course of the time and how important spare cash you have in your budget each month to spend on your home loan prepayment. still, if you have only been in business for a many times or your income in inconsistent because you run your business to be duty effective rather of to turn over high gains on paper, also you could profit from tone- certifying that you’re suitable to service a loan.

What documents will I need to give my lender when applying for an Low doc home loan?

Lenders by law must fulfil the National Consumer Credit Protection Act (NCCP) of 2009 by making sure that they make reasonable enquiries about your financial situation and confirm affordability before approval of any residential lending. This means they’ll confirm your capability to repay the loan using a combination of your declared income and supporting documentation.

What supporting income documents do I need to provide on an Low Doc Loan?

• 6 to 12 months of Lodged BAS Statements.
• An Accountants Letter verifying your income.
• 3 to 12 months of Business bank statements
• Old tax returns (over 24 months) with current financial statements.

Can I refinance my Low Doc Loan?

Yes, once you have met the policy of mainstream lenders and have 2 years of lodged profitable tax returns.

Ray Ethell offers a wealth of experience to his clients, gained from over 20 years in the Finance industry, and prides himself on providing reliable customer focused service.