• Home
  • Services
    • Guarantor Loans
    • Debt Consolidation
    • Home Loan Redraw and Cash Out
    • Home Loan Refinancing
    • LMI Waiver for Financial Professionals
    • LMI Waiver for Health and Medical Professionals
    • LMI Waiver for Legal Professionals
    • Mortgages for Doctors
  • Calculators
    • Borrowing Power Calculator
    • Extra Repayment Calculator
    • Home Loan Offset Calculator
    • How Long To Repay Calculator
    • Income Annualisation Calculator
    • Income Tax Calculator
    • Interest-Only Mortgage Calculator
    • Loan Repayment Calculator
    • Lump Sum Repayment Calculator
    • Mortgage Switching Calculator
    • Split Loan Calculator
    • Stamp Duty Calculator
Menu
  • Home
  • Services
    • Guarantor Loans
    • Debt Consolidation
    • Home Loan Redraw and Cash Out
    • Home Loan Refinancing
    • LMI Waiver for Financial Professionals
    • LMI Waiver for Health and Medical Professionals
    • LMI Waiver for Legal Professionals
    • Mortgages for Doctors
  • Calculators
    • Borrowing Power Calculator
    • Extra Repayment Calculator
    • Home Loan Offset Calculator
    • How Long To Repay Calculator
    • Income Annualisation Calculator
    • Income Tax Calculator
    • Interest-Only Mortgage Calculator
    • Loan Repayment Calculator
    • Lump Sum Repayment Calculator
    • Mortgage Switching Calculator
    • Split Loan Calculator
    • Stamp Duty Calculator
the mortgage agency logo
  • About
  • Blog
  • Contact
Menu
  • About
  • Blog
  • Contact
the mortgage agency logo
  • About
  • Calculators
    • Borrowing Power Calculator
    • Extra Repayment Calculator
    • Home Loan Offset Calculator
    • How Long To Repay Calculator
    • Income Annualisation Calculator
    • Income Tax Calculator
    • Interest-Only Mortgage Calculator
    • Loan Repayment Calculator
    • Lump Sum Repayment Calculator
    • Mortgage Switching Calculator
    • Split Loan Calculator
    • Stamp Duty Calculator
  • Contact
  • Services
    • Home Loan Refinancing
    • LMI Waiver for Financial Professionals
    • LMI Waiver for Health and Medical Professionals
    • LMI Waiver for Legal Professionals
    • Mortgages for Doctors
  • Blog
Menu
  • About
  • Calculators
    • Borrowing Power Calculator
    • Extra Repayment Calculator
    • Home Loan Offset Calculator
    • How Long To Repay Calculator
    • Income Annualisation Calculator
    • Income Tax Calculator
    • Interest-Only Mortgage Calculator
    • Loan Repayment Calculator
    • Lump Sum Repayment Calculator
    • Mortgage Switching Calculator
    • Split Loan Calculator
    • Stamp Duty Calculator
  • Contact
  • Services
    • Home Loan Refinancing
    • LMI Waiver for Financial Professionals
    • LMI Waiver for Health and Medical Professionals
    • LMI Waiver for Legal Professionals
    • Mortgages for Doctors
  • Blog
  • Book in your Free discovery session now!
Uncategorized
/
July 28, 2020

Your Guide to Low Doc Loans

Tony Xia

SHARE

If you’re a contract worker or self-employed, you certainly have lots of perks, but when it comes to taking a home loan, furnishing your ‘income proof’ can be a headache. Lenders predominantly ask for financial statements because they want assurance that there’s a positive cashflow within the business.

The benefits of being self-employed is you can purchase your dream home through a low doc refinance home loans when your financials are not up to date. With the low doc loan approach, lenders will review your overall capability to service a loan based on certain levels of documents.

Here’s everything you need to know about low doc loans.

Lo Doc Home Loan: What Is It?

Low documentation loans are lending solutions for the self-employed. If you’re a freelancer, contractor or someone who doesn’t do regular jobs, and cannot produce evidence of income such as tax returns, financial statements or payslips, low doc loans can be very useful. investment Property

In these types of loans, a self-verification system is utilized where you have to state how much you earn with a document of declaration, majority of the time through an accountant’s letter, BAS or bank statements.

Low doc loan means that you’ll have to produce a lower number of documents in comparison to regular loans. Other than that, you’ll also have to meet certain requirements such as:

  • You must be self-employed for at least 1 year and in some cases, 2 years.
  • You can’t have a second mortgage on the property.
  • Full property valuations
  • The maximum borrowing capacity is 80% of the property’s purchase price. However, some lenders may lend up to 90%. If you don’t want to deal with Lenders Mortgage Insurance (LMI), typically you can’t borrow more than 60%
  • You must also possess a clean credit history.

Low doc loans provide a lot of convenience for the self-employed. However, they generally have higher costs, and as such, it’s critical that you take your time to assess whether you can afford the loan. Its also highly recommended that you wait until you possess at least a 20%.

What Is An Income Declaration Form?

When you apply for a loan, banks uses an income declaration form to certify your income. Generally, you’ll have to fill in your name, business name, ABN, the amount you want to borrow along with your indicative repayments. The bottom of the form will contain a declaration stating that the income you mentioned is true and that you’ll be able to provide the repayments.

Every lender provides their own declaration form, so the requirements can vary. Some lenders can offer a no doc option where you don’t have to even declare your income or asset possession. In most cases, you’ll have to verify your liabilities and assets.

What Documents Are Needed For A Loc Doc Loan?

Even though it’s a low doc loan, you still have to submit some documentation. Below are some of the essential documents that a lender may need:

  • Last 12 months Business Activity Statements (BAS)
  • Australian business number (ABN)
  • Registered business name
  • Bank account statements for the last few months
  • Sometimes you might have to prove that you’re GST registered for a minimum of 12 months.
  • You may also have to sign an income declaration form.

Most lenders require a minimum of 2 documents. However, its also important to note that the required documents can differ from lender to lender.

Why Go For A Low Doc Loan?

There are various reasons why people opt for a low doc loan, but the most common factor is because they’re unable to product proof of income. It can also be because:

  • You have distributed your income from your trust to your family members.
  • Your company structure is too complex.
  • You possess huge deductions like depreciation, which isn’t a genuine expense.
  • You don’t possess the latest tax returns.
  • Delaying for tax planning

Can Low Doc Loans Be Refinanced?

In short, these types of loans can be refinanced. If you’re thinking about refinancing your current loan for a more profitable one, you’ll have to basically reapply for a new loan. It’s important to keep in mind that just because you qualified previously for a low doc loan doesn’t necessarily mean you can refinance now. Instead, you can be subjected to stricter documentation and eligibility requirements.

As such, if you’re refinancing to a low doc loan or purchasing a new property, make sure to update your financials to ensure that you get the best options on the market.

Conclusion

Low doc home loans are a fantastic alternative for those who can’t provide the traditional proof of income. They are simple, fully serviceable loans with very low documentation.

However, you also have to keep in mind that they incur high-interest rate with few features, and most lenders and banks don’t offer them. Be 100% certain that you’ll be able to finance the loan and ask your potential lender as many questions as possible so that you don’t have any doubts about your loan requirements.

It’s best if you consult a specialized local mortgage broker for your low doc loans.

About Tony Xia

Having worked in the customer service and finance industry since 2011, our Director Tony Xia and his team’s highest priority is to cultivate a long-lasting relationship with clients based on trust and respect at The Mortgage Agency.

Related

Top 4 Questions To Ask Your Mortgage Broker

July 24, 2022
/
Mortgage Broker
Tony Xia
high lvr home loans

What Is An Interest-Only Home Loan & How Does It Work?

July 24, 2022
/
Investment Property Loan
Tony Xia

Breaking Into Property Investment—How A Broker Can Help

July 7, 2022
/
Investment Property Loan
Tony Xia

Borrowing Power: How Much Can I Borrow For My Mortgage?

June 24, 2022
/
Loan Tips
Tony Xia
key with a mini house

How Much Can I Borrow With A Guarantor Mortgage?

June 21, 2022
/
Loan Tips
Tony Xia
key with a mini house

What Happens When You Pay Off Your Mortgage?

June 21, 2022
/
Mortgage Broker
Tony Xia

Everything You Need to Know About a Pre-Approval Home Loan

April 1, 2022
/
Home Loan Tips
Tony Xia
first home buyer mortgage broker

How to Choose a First Home Buyer Mortgage Broker Suited To You

March 17, 2022
/
Mortgage Broker
Tony Xia
land loan

The Ultimate Guide on Land Loans

March 17, 2022
/
Loan Tips
Tony Xia
rental tax

How Is Rental Income and Loss Taxed?

November 15, 2021
/
Rental Tax
Tony Xia

Top 4 Questions To Ask Your Mortgage Broker

July 24, 2022
/
Mortgage Broker
Tony Xia
high lvr home loans

What Is An Interest-Only Home Loan & How Does It Work?

July 24, 2022
/
Investment Property Loan
Tony Xia

Breaking Into Property Investment—How A Broker Can Help

July 7, 2022
/
Investment Property Loan
Tony Xia

Borrowing Power: How Much Can I Borrow For My Mortgage?

June 24, 2022
/
Loan Tips
Tony Xia
key with a mini house

How Much Can I Borrow With A Guarantor Mortgage?

June 21, 2022
/
Loan Tips
Tony Xia
key with a mini house

What Happens When You Pay Off Your Mortgage?

June 21, 2022
/
Mortgage Broker
Tony Xia
Preferred partners
anz logo
ing logo
better choice logo
adelaide logo
auswide-bank-logo
beyond bank logo
bank australia logo
bank of sydney
bluebay homeloans logo
bluestone logo
bmm logo
citibank logo
cba logo
emoney logo
equifax logo
Firstmac-Logo-2016-Copy
fms logo
galilee logo
Heartland Finance logo
heritage
illion logo
get capital logo
latitude logo
latrobe logo
Macquarie_Bank_Logo_MBVert_BLK
me bank logo
mezy mortgage logo
mkm logo
movbe bank logo
mystate bank logo
st george
paramount logo
pepper money logo
virgin logo
plenti logo
qudos bank logo
resimac logo
suncorp bank logo
thinktank logo
ubank-logo2
victorian mortgage group logo
westpac logo
wisr
WLTH logo

Speak to the mortgage agency today

Talk to us now
hte mortgage agency footer
  • Home
  • About
  • Calculators
  • Services
  • Locations
  • Blog
  • Contact
Contact Us

Bella Vista Office

  • 217/14 Lexington Drive, Bella Vista, NSW, 2153
  • 0423 718 612

Parramatta Office

  • 19/103 George St, Parramatta NSW 2150
  • 1800 242 234

Penrith Office

  • 95b Station St, Penrith NSW 2750
  • 1800 146 759

Sydney Office

  • Seabridge House, Suite 120/377 Kent St, Sydney NSW 2000
  • 1800 146 759

Serving The Wider Sydney Area

  • Canterbury-Bankstown
  • Eastern Suburbs
  • Forest District
  • Greater Western Sydney
  • Hills District
  • Inner City
  • Inner West
  • Northern Beaches
  • Northern Sydney
  • St George
  • South-Western Sydney
  • Sutherland Shire
the mortgage agency logo
Tony Xia is A Credit Representative (477089) Of Mortgage Specialists Pty Ltd ACN 050 601 093 (Australian Credit Licence 387025)
Facebook-f Linkedin-in Instagram
Copyright @ 2022
  • Terms and Conditions
  • Privacy policy
  • Website Safe and Secure
  • Made With
  • By Digital Recipe