A Low doc home loan is a loan for self-employed individuals and small business owners who may not have the right documents when they are approaching a bank. Instead of approaching a bank and possibly being rejected, they can apply for a low doc home loan with an alternative lender.
Low doc home loans are designed for people who can’t get a home loan because they lack documentation and a way to validate their earnings without using the PAYG system. So instead, they can submit the following:
- 3-12 months of business bank statements
- 6-12 months of BAS Statements
- letter from their Accountant verifying their income
- Old tax returns (over 24 months) in combination with current financial statements
These people who may have previously been rejected have a second chance of getting a home loan through an alternative lender. They can use the loan for a variety of reasons such as; purchase of a home or homes, refinancing, renovations, home builds, land banks and development projects depending on how much they actually need to borrow.
Who can apply for a low doc home loan?
Self-employed individuals and small business owners and anyone who has difficulty with proving their income can apply for a low-doc home loan. Or anyone self employed that has been rejected from a bank or mainstream lender but desperately wants to get into a home loan.
How do you apply for a low doc home loan?
You will need to apply to a lender outside the mainstream banks that offers a low doc home loan solution. There aren’t many of these type of lenders around, so it is important that you do your own research. Not all lenders are created equal and some may require a fairly large deposit whilst also charging hefty interest rates. So look for one that suits your needs.
Once you have found a suitable lender which offers great terms, then you can apply for a loan. Generally during the application process there is a quotation phase, where the person needs to apply for a quote for their specific circumstances. During this step, they will need to submit a few documents to the lender.
What they will need to submit are;
– an ABN registered and if possible GST registration if the business is GST eligible
– fairly clean credit, some lenders will not lend with credit impairments.
– provide why the loan is congruent with the business they are in and their age, e.g. an 18-year-old retail assistant may not be able to borrow large amounts
– security: if possible security may be considered but not if the property is in non metro areas, unique, in disrepair and or difficult to sell
– Loan To Value Ratio: below 85% LVR on purchases, refinance and cash out
Then after submitting all the paperwork, the next step is the conditional approval, whereby the lender approves the loan based on certain conditions. Next comes the loan approval and then the formal signing of documents. Then from there the loan will actually begin, and the borrower can then go ahead and make their purchase.
Are low doc home loans still available in Australia?
Yes, they are still available in Australia. Only a few lenders offer low-doc home loans, so be prepared to shop around.
We have mortgage brokers that specialise in Low Doc Loans with many lenders that most mortgage brokers do not have on their books. Please complete our Application Form or Phone Direct and you can discuss your situation with an expert as it is important to deal with a broker that has several options and is experienced in dealing with Self Employed Lending.
If you wish to proceed, then we will help you to complete all the necessary paperwork and liaise with the lender on your behalf. This will include the completion and submission of your low doc home loan application and the ongoing communication between all parties until your home purchase is settled.