Low Doc Loans
Low Doc Loans are loans offered to self employed people who can afford to repay a loan, but may not have the usual documentation to qualify for a full documentation loan.
A Low Doc Loan can be suitable where you have a deposit to buy a new home, or you have equity in an existing home and you wish to refinance or buy an investment property.
Most lenders require you to produce 2 years financial statements to demonstrate your income. But if you have only recently commenced business, have fluctuating cash flow or have simply been too busy to complete your financial returns, this can sometime be difficult.
This is where the Low Doc Loan can help.
What can I get a Low Doc Home Loan for?
- purchase or a new home
- purchase of an investment property
- refinance or an existing home loan
- debt consolidation
What documentation will I need?
This depends on the amount of deposit that you have (if you are purchasing) or the amount of equity that you have in an existing property for other loan purposes. Lenders work out what the loan to value ratio is (LVR) which simply means the amount of the loan you need divided by the property value expressed as a percentage.
Loan amount Property Value LVR is
$240,000 $400,000 60%
$320,000 $400,000 80%
Low Doc Loan lenders will generally lend up to 80% LVR. Every lender is different and therefore it pays to speak to an experienced broker if you are considering a low doc loan.
Are Low Doc Loans more expensive?
This depends on the loan the value ratio (LVR), the purpose of the loan and the lender.
Some lenders offer their standard range of loans for this purpose, subject to certain qualifying criteria.
Because of the greater risk with a Low Doc Loan, you may have to pay a slightly higher interest rate, Lenders Mortgage Insurance or a Risk Fee.
Low Doc Loans for Business
Low Doc Loans can also be approved for business or investment purchases against either residential or commercial properties for the following purposes:
- business working capital
- refinance
- property purchase
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