Welcome to our Low Doc Home Loans information page: This page is designed to assist you in understanding the basics of this type of loan and to give you an understanding of some of the features and downsides.
About Our services:
- Our brokers are experts in obtaining home loan approvals and specifically trained in loan structuring and credit policy, ensuring the best possible outcome for your needs.
- We provide an Australia wide service, at no cost to you.The lenders pay us a commission for the introduction of your business.
- Our website is designed to help borrowers understand the differences between loan types and the importance of having a mortgage broker to assist you in finding the right lender.
About Low Doc Home Loans:
What is a Low Doc Home Loan?
Low Doc, also known as low documentation or self-employed home loans are to assist borrowers who are self-employed customers only, who may not have completed their most recent Australian Tax Office tax returns.
This type of loan is designed specifically for self-employed applicants who may not be able to provide their most recent financial statements or tax returns. As you may know, most lenders will require income documentation in order to assess the affordability when approving a home loan for you.
The banks understand that it is not always possible for self employed clients to provide up-to-date taxation information because of the nature of business tax return lodgement times. For example, most companies and businesses in Australia, are not obligated to lodge tax returns immediately at the end of the financial year.
There are several ways that the banks will assess your income for a low doc application. You may need to provide some of the following information, instead of the Tax Returns:
NOTE: Not all of our lenders will ask for everything listed here. This list is a guide only as to what could be required.
- A signed accountant’s letter stating your earnings which supports your income declaration.
- Your ABN number: please note that if your ABN number is not registered GST, then the majority of lenders will not be able to assist you with this type of loan.
- Your registered business name.
- A signed borrower’s income declaration form supplied by the lender.
- Your business activity statements for the last 12 months. (BAS)
- There may be other items that certain lenders may also ask for in addition to the list above. Not all of them will ask for everything listed here.
Please don’t go to the trouble of organising all of these documents until we confirm what you may need.
Should You Choose a Low Doc Home Loan?
Whether or not you should apply for a low doc home loan will be determined by a few different factors. The main thing to note here is that if you have not completed your last year’s tax returns, then you may have no other choice but to apply for a low doc home loan.
We will always ask you if you have figures available for your business to assess the viability of applying for a low doc home loan or if we could possibly look at different options for you that will work out to be cheaper and more effective. It all depends on the availability of your income figures and details surrounding your self-employment history.
What benefits are there for you in a Low Doc Home Loan?
There are several benefits to this type of facility, the main one being that if you are self-employed and your income figures have not been completed, then you still have options available to apply for a home loan. Other benefits include:
- Low Doc home loans are available for refinance applications, purchase of owner occupied property and the purchase of commercial property.
- In recent years, the lenders have altered the interest rates associated with low documentation home loans. These loans used to be a lot more expensive than the normal home loan products. These days the interest rates with certain lenders can be the same as a full doc home loan product (using income figures). Of course some lenders are dearer than others and your mortgage broker will be able to guide you once they know more about your situation.
- You will generally be able to use your equity in other property that you may own, to complete this transaction if needed.
- Some lenders only require a letter from your accountant and for you to complete a self-declaration form for low doc lending. They understand that BAS statements are not always available.
- Fixed-rate loans are available on most Low Doc Home Loans.
- You can still apply for up to a 30 year loan term on most Low Doc Home Loans.
What do you need to be careful of regarding Low Doc Home Loans?
There are several things to consider when you apply for a Low Doc Home Loan. The nature of this loan is to assist borrowers who are not able to provide income figures at the time of application. It is important to keep in mind that the bank will still assess your ability to repay the loan and a Low Doc Home Loan is not designed to assist with low income applicants. Obviously the loan still needs to be paid back to the lender and the lender needs to satisfy itself that the borrower will have the ability to do this.
Other points to consider:
- Most low doc loans will require a minimum 20% deposit for purchases.
- If you are refinancing, you will only be able to borrow up to a maximum of 80% of the value of the property or combined properties.
- In order to apply for a Low Doc Home Loan, it is a requirement of most lenders that your ABN number has been registered for more than one year AND is registered for GST.
- Depending on the lender, you may not have the most competitive rates on the market. It is important to understand what lenders are available to you, to ensure that you are applying for the right loan, and also applying with the most suitable lender to ensure you obtain the best interest rate possible.
- Loan amounts can be restricted with some lenders, for example, some will not lend more than $750,000. This is a case by case basis that should be discussed with your mortgage broker.
- Mortgage Insurance costs will be payable with certain lenders when you borrow more than 60% of the property value. There are a select few lenders who will still lend you 80% of the security value, and not charge mortgage insurance. This can save you thousands of dollars.
- It is important for you to allow us to perform a comprehensive needs analysis on your financial situation before applying for any of the many Low Doc Home Loans available. Because of the fact that you are self-certifying your income, it is very important to understand your obligations and repayments in regards to Low Doc Home Loans. Your loan advisor here at Illawarra Mortgage Brokers will be able to assist you with further information.
How can I apply?
These are your simple steps to apply for a loan.
- Contact us on the numbers above to speak to a mortgage broker, or complete our online enquiry form.
- You will speak with a broker who will take into account your needs by discussing not only your requirements, but also any concerns you have, and offer you some possible strategies and ideas that you may not have thought about.
- Once we know what you require, we will draft and email you a proposal– this will usually consist of a few options that are easy to understand.
- Once you have had a chance to look at what options are available, you can contact your broker or the broker will call you, to discuss the proposal.
- You can then decide if you wish to proceed or you may just want to discuss more options.
What are my other options?
There are many options available:
- Whether you are after a variable interest rate, a fixed interest rate, interest only loan, equity loan or any of the other loans available, it is important that you find out what is available to you before applying for a loan.
- The loans listed below are available for most lending purposes. Whether you are refinancing your home loan to a lower rate, or a property investor looking to buy that second or third property, we will have some ideas for you to consider.
- Even if you are a first home buyer purchasing a new home or renovating your existing home, there are some great deals available from the banks and lenders that we are accredited with.
- Please click on a link below to learn more about other loans that are available to you.