Low Doc Home Loans

Australia is built on the self-employed. Currently there are over two million independent contractors or Self Employed. Most don’t have their financials ready at the time of application and therefore won't fit into the Banks format when applying for a?self-employed home loan.

It can be difficult for the Self Employed to get a mortgage from a bank compared to a PAYG worker who generally only requires 2 pay slips to prove income. Although financial statements and tax returns aren’t required for these loans, lenders will need confirmation that you are able to repay your home loan.

This can be a blessing of a low doc loan - if used correctly.

For these low doc home loans, you may need to provide the lender with a declaration of income certified by your accountant and a personal declaration of your income. Be warned - this is not an excuse to make up an income figure! And a good mortgage broker will never lead you into declaring an income figure that is not true or relevant for your industry.

A low doc home loan is available for both Clean Credit and bad credit clients. The interest rate you pay will be dependent on your credit history. Low doc home loans are a great solution for Self Employed Aussies that do not have up to date lodged Tax Returns - this is the legitimate use of low doc loans. There is no point calling a mortgage broker, telling them about your financials, and then ask about a low doc option if you don't service.

The main documents required to verify your income for a low doc home loan are:

• An Accountants Letter verifying your income.
• Personal declarartion.

This usually is enough, however sometimes a lender may ask for:

• 3 to 6 months of Business bank statements
• Old tax returns (over 24 months) with current financial statements.

Maximum loan amounts on Self Employed Home Loans.

1. Will allow you to borrow to a maximum of $2,000,000 to 80% of Property Value.
2. Will allow you to borrow to a maximum of $2,500,000 to 65% of Property Value

What do banks look for when assessing low doc loans?

Every lender has different policies, however there are some standard criteria.

• Length of ABN / GST registration:?You need to have an ABN that has been registered for GST. Most Lenders require ABN to be registered for at least 12 months. We have lenders who may accept an ABN registered only 6 months old - but remember, your interest rate will go higher, the shorter the ABN.
• LVR:?Maximum LVR is to 85%.
• Reasonable income declared for the business:?Lenders assess if income and current assets are in line with Business and age. For example an 18 year old courier with no assets would be declined if they declared an income of $350,000.
• Clean credit:?Best rates require clean credit applicants. Loans up to 80% with credit impairments allowed.
• Security:?All Funders will take a risk on the applicant but not on the property. Properties that are in non-metro or regional population areas or unique, requiring major repairs, dilapidated or difficult to sell are usually not accepted.
• Cash out:?Our Specialist Lenders will allow cash out up to 85% LVR. You will have many more lender options if you limit the LVR to 80%.
• Debt Consolidation:?Our Specialist Lenders will allow Debt Consolidation to 85% LVR.

Best Rates for Low Doc Home Loans:

Rates on Low Doc Home Loans are determined by these main factors.

• Lower the LVR: Higher deposits have less risk so rates are lower.
• Location: Capital Cities generally have lower rates applied.
• Clean Credit: Low Doc Home Loan Applicants with bad credit have a risk interest rate added.

Talk to a mortgage broker:

I can help you with your Low Doc Home Loan IF you legitimately do not have a recent tax return or financials. There are many reasons why you don't have your financials up to date, such as being time poor, waiting on the accountant etc. Just remember, once you mention you have your financials, low doc is no longer an option.

Give me a call, and I will show you your options.

Matthew Stack - Mortgage Broker - 0423 237 242

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