What is a low doc home loan? 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 but recently they tend to be offered at similar rates. While lenders have various methods of establishing whether they will lend someone money, there are some major differences between mainstream and low-doc loans. Differences between standard and low-doc loans Low-doc 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. Get FREE Loan Assessment The main documents that can be used to verify your income are: 12 months’ BAS statements showing a high turnover. An accountant’s letter verifying your income. 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. For any more details please call Your Finance Adviser’s lending specialist on 1300 YFA BROKER (932 276) or you can visit us online at enquiries@yourfinanceadvisor.com.au Click Here For Obligation Free Assessment
