Our Lending Specialists Help You Choose Low Doc Home Loans

Low-documentation or low-doc loans are for people – generally the self-employed – who have difficulty getting the documentation together that is required to get a traditional home loan.

Traditionally, the interest rate offered on these types of loans was higher than for the standard variable rate. While lenders have various methods of establishing whether they will lend someone money, there are some major differences between mainstream and low-doc loans.

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Difference Between Standard and Low-Doc Loans

Low doc home loans do not require traditional proof of income such as company financials or tax returns.
Borrowers seeking a low-doc loan generally complete a declaration that confirms they can afford the loan. This is known as self-certification.
Low-doc loans tend to be more attractive to self-employed people or full-time investors who may have difficulty showing a high level of income, as a result of either writing off a number of expenses, reinvesting profits into a business, or being slow in lodging their tax returns.

The Main Documents That Can Be Used to Verify Your Income Are:

12 months’ BAS statements showing a high turnover.
Accountant’s letter verifying your income.
6 to 12 months Business bank statements showing a high turnover.
Old tax returns (over 24 months).
Interim financial statements.

Under the National Consumer Credit Protection Act (NCCP) Act lenders are required to have some kind of income verification from you before they can approve your mortgage.

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FAQS

Which profile fits for low doc home loans?

Low doc home loans are generally developed for self-employed professionals or those who could not present proof of income through traditional means.

What is the advantage of low doc home loans?

This is the only option through which you can borrow without any recent tax or financial statements.

Is there any minimum requirement for a low doc loan?

It’s not that a low doc loan does not require anything to qualify. There are specific requirements you need to fulfil such as:

Self-employed for a minimum of 1 year
Clean credit history
Full property valuation
No second mortgage on the property
Maximum borrowing of 80% the property value

What are the risks of a low doc loan?

There are far greater restrictions on this type of loan. It comes with a higher interest rate, needs a larger deposit, and mortgage insurance is usually applicable if you borrow over 60% of the property value.

Which benefits are not available with a low doc loan?

There is no provision of 3rd party guarantee who can repay in case you default. You can also not avail repayment breaks that allow you to take a break from repayments for an agreed period.