About Low Doc Home Loans
‘Low doc’ is short for low documentation home loan. It is suitable for the self employed and anyone else who is unable to provide full financial statements or other evidence of income when applying for a loan.
This type of loan is a flexible financial solution that can help you obtain a mortgage if you are a business owner, contractor or freelancer. With a low-doc loan, you have the option of ‘self-certifying’ your income without needing to provide proof of employment as you would with most other loan types. However, you still have to have a good credit history and this will be assessed.
Interest rates and repayment amounts also tend to be higher to compensate the lender for the increased risk.
Compare our low doc mortgage interest rates and product features below.
Less paperwork required during the home loan application process.
The application process for a low doc home loan is quicker for the self employed than a full doc home loan.
Interest rate discounts may apply after a period of successful home loan repayments.
The interest rate and repayment amounts are higher than a full doc home loan.
Lenders Mortgage Insurance is normally required when taking out a low doc home loan, which adds to the cost.
Are low doc loans right for me?
Low doc stands for low documentation. Therefore, a low doc loan is a type of loan you can apply for, without having the same level of documentation you need for a normal loan or mortgage. You have the option of self-certifying your income, without needing to provide employment proof, as you do with other loans. Low documentation loans can be mortgages, or they can be personal loans. They can be a great option if your income is irregular, or if you derive your income from investments such as property or the stock market. Low doc personal loans can have a lot of the same features as normal everyday loans, but because of the higher risk to the lender, the fees and interest rates can be a fair bit higher at times. At Mortgage House, we can help you find a suitable low doc loan, using the documentation you have available.
Who benefits the most from low doc loan options?
Low doc mortgages and personal loans are for people who may not be able to easily obtain, or even have, the thorough documentation required for a normal loan. You may be self-employed, don’t have a regular job, be a contractor, run your own company, or be a freelancer. This means you probably won’t have regular payslips, for example, but may still be able to comfortably service a loan or a mortgage. You may also not have access to financial statements or regular tax returns. These mortgages or loans are flexible, and allow you to apply for them without proof of employment. However, you will still need a good credit history, which the bank or lender will assess. Low doc mortgages are not a free kick for people with a bad credit history, or a history of defaulting on loans.
What are examples of low documentation?
To get around the lack of regular documentation, low doc mortgages and personal loans do require other kinds of documents. Banks and lenders need to prove they have looked in to your financial situation before offering you a loan, so there will still be some information you will need to provide. It won’t be as much information as an application for a regular loan, and it’s information that shouldn’t be too hard to get. You may need to supply some, or just one, and each lender is different and can have different lending standards. Providing Business Activity Statements, usually from the previous 12 months, is a common requirement. If you don’t have payslips or tax statements, a declaration stating how much you earn can suffice, as can a signed letter from your accountant. If you apply through your business, you will need to give them your registered business name and ABN, and previous bank statements. If you are self-employed and your income is irregular, then it might be a good idea to seek a guarantor, or someone who will give the lender a guarantee the loan will be paid. You also may need at least two years of tax returns.
What are the advantages of a low doc mortgage?
If you are a business owner, contractor or freelancer, then a low-doc loan can help you get into your own home. Low doc mortgages have a few advantages, including that less paperwork can be required. As a result, the application process can be quicker. While interest rates and repayment amounts are generally higher than full doc loans, interest rate discounts can apply after a period of regular loan repayments. At Mortgage House we have a number of low doc mortgages for you to choose from. We can find the best options for you, and find the loans available that suit the documentation you have. We offer both fixed and variable interest rate loan options, with a range of individual features and minimum and maximum borrowing amounts. Give us a call and we can talk you through them all.
Are there any restrictions for low doc borrowers?
If you are a low doc borrower, you need to be aware that low doc mortgages differ slightly from other mortgages in a number of areas, aside from the lower level of documentation required. For a start, interest rates can be higher, and you may need to pay Lenders Mortgage Insurance. You may also need a deposit when applying to borrow. Most lenders will only let you borrow about 80% of the cost of the property. You can look at refinancing in the future, and you can refinance with another low doc loan, but the restrictions can be higher again