A Low Doc Home Loan, also known as a low documentation loan, is a type of home loan that does not need borrowers to show general financial documentation to their lender. Low Doc Home Loans are usually available to those who have an ABN, or are self-employed borrowers and can be a good choice if you find it hard to obtain finance through conventional channels.
However, Low Doc Home Loans typically have higher interest rates and charges than other types of home loans. So it is significant that you know how they work before making any positive decisions. In this article, we will provide you with a comprehensive overview of Low Doc Home Loans.
What Is a Low Doc Home Loan?
A Low Doc Loan is a type of home loan that does not need borrowers to give extensive financial documentation to their lender. This can make it much easier to succeed for a loan, particularly if you are a contractor or self-employed individual.
There are various types of Low Doc Home Loans, and each has a dissimilar supporting earnings verification obligation. As a general rule, the less paperwork, and loan-to-value ratio, the lower the available loan amount, as well as higher rates and charges. The broker’s goal is to discover the best type of low-doc loan that exploits your income.
Not every lender provides Low Doc Home Loans, but those that do are always very decent and will have the knowledge and credit policy to suit your requirements. As an added benefit, low-volume home loans don’t lock you in for the near future. When your financial conditions allow, your loan may be refinanced using more conventional channels.
What Are the Requirements for a Low Doc Home Loan?
The requirements for a Low Doc Home Loan are not as strict as they are for other kinds of financing. Typically, all you will need to show is proof of identification, income (either a statement from the applicant, a letter from the accountant, evidence of business earnings via bank statements and BAS filings) as well as employment status.
Maximum Loan Amounts and Loan Values
These differ and are usually given in a matrix where the max. Loan-to-Value Ratio (LVR) is reduced as the loan amount rises. However, the Loan-to-Value Ratio is usually capped at 80%, as well as the loan amounts to $2 million. Click here to read about 5 Factors to Bear in Mind When Planning a Low-Cost Loan.
Is a Low Doc Home Loan Best for You?
Low Doc Home Loans are an extremely efficient means of getting financing for self-employed individuals. If you have trouble obtaining financing through conventional channels, a low-document loan might be a strong option for you. Just make sure to compare prices and options before making any decisions.
Bottom Line
When you consider a Low Doc Home Loan, it may be useful to speak with a trusted mortgage broker or financial advisor. Not all brokers have experience making low-documentation loans and it helps to have a skilled broker on your side. It may be a great idea to ask your broker whether they have access to a sphere lender on their board. If your broker favors only dealing with the chief banks, then you may want to start looking at other providers.
