Low doc or low documentation home loans are loan products that don’t require all the evidence of income and employment that regular home loans do. They are ideal for freelancers, small-business owners and contractors who might not have access to up-to -date tax returns, payslips or employment contracts to prove their income.
In this guide you’ll learn:
While these loans can be great for certain borrowers they do have a few drawbacks. It’s important that you’re aware of all the implications and extra costs before applying.
Low doc home loans are ideal for anyone who can not produce the employment contracts, payslips or financial statements as documented evidence of income.
There are a few key differences between low doc home loans and regular home loans that are important to understand before making an application.
While the process of applying for a low doc loan is similar to a standard home loan, there are certain requirements and eligibility criteria which may make the process more difficult. To qualify for a low doc home loan, you will generally need:
Each lender has different criteria, but many require that your ABN has been registered for at least one year. Once you’ve sorted those three items, you’ll need to prepare your documentation and choose a lender and loan product.
To prove your income, identity and employment when applying, you’ll need to provide alternative documentation. The specific requirements will vary between lenders, but usually includes:
Low doc home loans are usually available with all the same features that regular loans have, however there are a few that may be particularly attractive to business owners, self-employed people and contractors:
Low doc home loans are designed for freelancers, business owners, contractors and other people who don’t have the normal documents required to apply for a home loan.
For help getting your documents together and getting your application approved it may be a good idea to speak to a mortgage broker. They’ll help you improve your application and apply through lenders they know are more likely to approve your application.
If you’d rather apply directly there are a number of lenders who offer low doc home loans, including big four lenders like CBA and ANZ.
Yes, low doc home loans are ideal for self-employed people, business owners, contractors and anyone who does not have the income verification documents normally required to apply for a home loan.
Yes, they are available, although you may need to apply through a specialist lender, non-bank lender or mortgage broker and you may be charged a high interest rate.
Yes if you can prove that you have the income to service the loan you should be able to get a low doc, low deposit home loan with a deposit as small as 10% (90% LVR). Although if you have less than a 40% deposit (60% LVR) you may have to pay lenders mortgage insurance and higher interest rates.
Low doc home loan interest rates are sometimes higher than regular home loan interest rates because lenders identify low doc borrowers as higher risk. However, if you have a deposit of 40% or more you may be able to secure market interest rates.
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