Low Doc Loans: Mortgages for Today’s Changing Workforce

Over the last decade, technology, data, and software have helped evolve the traditional mortgage. These tools allow lenders to process an application more efficiently. There is more time to analyse the risk posed by each applicant. Low doc loans are designed to help business owners, contractors, and freelancers become homeowners. Up until recently, the self-employed were an untapped market. Let’s explore the basics.

Who Qualifies for Low Doc Loans?

Low doc loans target individuals who can only provide low documentation during the mortgage application process. Traditional home loan applications require pay stubs, which cannot be provided by a freelancer. So, this is an alternative that benefits both the contractor and the lender. 

What Low Doc Loans are Available?

Under this loan-type umbrella are several mortgage options including fixed, variable, and investment. The difference is that an alternative set of standards is applied to the final lending decision. Our Home Loan Prime Self Employed 50, 70, and 80 are three mortgage examples. It’s still a mortgage, but it’s tailored to a growing group of the labor market.

How are Interest Rates Impacted?

Lenders conduct a thorough background check of each applicant’s finances to determine risk. The self-employed applicant can only provide limited documentation, which poses a risk.  At the same time, they can become homeowners, but their situation attracts a higher interest rate. So, this is a more expensive option. However, there are ways to offset the additional cost.

Low Doc Loans Conclusion

Lenders acknowledge that the labor market has changed. It has been tougher for the self-employed to become homeowners. The low doc loan offers an attractive mortgage choice. For more information, contact our Mortgage House team.