Understanding a Low Doc Loan
Entering 2022, five categories of mortgages exist including conventional, fixed-rate, and variable-rate. The conventional home loan features a fixed home loan rate over 30 years. To qualify, homebuyers submit three months of payslips and bank statements on top of other supporting financial documentation.
The low doc loan works a little differently.
In short, a low doc loan requires less financial documentation. Lenders designed it for small business owners, freelancers, and gig workers. This group of professionals does not receive traditional payslips. Therefore, they do not have the financial documentation a conventional mortgage requires.
To help this labour sector become homeowners, lenders accept alternative documentation. Plus, the home loan incurs higher home loan rates and the lender’s mortgage insurance fee. Small business owners must provide their business name registration and a financial letter from their accountant.
All applicants must complete the forms that use alternative ways to verify their income. It’s a different path toward homeownership. However, all paths ensure the applicant’s ability to repay their home loan.
In return, the homebuyer receives the opportunity to become a homeowner.
Mortgage House specialises in low doc mortgages. We also specialise in first-time homebuyers, no deposit, and owner-builder loan products. As non-bank lender, we have remained an innovator in the lending space. Our loan specialists efficiently evaluate applicants and find creative solutions.
Low Doc Loan Definition Conclusion
Homebuyers interested in learning more about the low doc loan definition can contact our loan specialists at Mortgage House. They can walk you through the alternative income verification forms and relevant features. Contact our team today.