What are Low Doc Loans?
Low Doc loans are loans for the self employed who may find themselves unable to provide the full financial statements and tax returns that are typically required. The standard requirements for most lenders these days is to provide your last two years Company Financials as well as Company and Individual Tax Returns. Some borrowers find these requirements too onerous and sometimes not reflective of their current business. Low Doc loans evolved to service these borrowers.
The Finance Professionals are specialists at providing solutions for the self employed. By using a Self Declaration of income, coupled with at least one of the below documents we can tailor a funding solution.
BAS Statements can be used to verify business turnover and from this figure a business income can be inferred. Most lenders require the last 4 BAS Statements but some accept 1 or 2 BAS Statements.
Business Trading Statements
By summing up all the credits on a businesses trading statements over a period of time, a lender can infer a business turnover. From this turnover figure, an income can be derived for the business. It is most common that 6 months Business Trading Statements be provided but some lenders can use as few as 3 months.
Typically one of the most important people involved with a business is its accountant. They are in the unique position of knowing what the true income of a business is. As such some lenders will accept a declaration from them, known as an Accountants Declaration, that simply states the income for the business. This Accountants Declaration is typically in a pro forma format specific for each lender.
Low Doc Home Loan Summary
|Max LVR (Purchases)||85% (including costs)|
|Max LVR (Refinances)||80%|
|Max Loan Size||$5,000,000 (up to 65% LVR)|
|Non Genuine Savings||Yes|
Additional Low Doc Options (non NCCP purposes only)
Self Declaration only
This type of lending is strictly for commercial or business purposes (non NCCP) and simply requires the borrower to state their income. The lender accepts this as a true indication of the borrowers income.
This type of lending is strictly for commercial or business purposes (non NCCP) and is typically referred to as an asset lend. The lender, typically a Private Mortgage funder, will advance funds against the valuation of the security property. It is standard for First Mortgages to be advanced up to 70% of the valuation with Second Mortgage / Caveat funds available to to 75% of the valuation. The interest rate, normally fixed rate, is determined by the perceived risk of the transaction.
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Bad Credit options are available for all Low Doc scenarios. Typically these are at a reduced LVR with additional fees and higher interest rates.
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How does a Low Doc lender work?
Lenders that provide Low Doc loans will normally look at several factors when assessing these types of applications. These factors include:
- Length of ABN / GST Registration – you must have a valid ABN. Lenders can accept these being registered from as short a period as 3 months, but typically they are required to be registered for 2 years. If you are declaring an income in excess of $75,000 then you must be GST registered as well.
- LVR – Low Doc borrowers have to provide additional equity in comparison to Full Doc borrowers. Most LVR’s are capped at 80% for purchases and refinances, though 85% LVR purchases are available, but these typically are at much higher interest rates.
- Actual Income Declared – lenders will review the income declared and compare this against industry standards and norms. Some lenders will apply rigid rules in this regard whereas others will apply more flexible guidelines if it can be proven that there is a genuine mitigating reason to do so.
In some instances a lender may consider applications from self employed borrowers that require only a self declaration of income. These are available for non NCCP borrowings only where the majority of funds are being used for Business Purposes. Lenders in these circumstances are typically Private Funders and they may consider 1st mortgages up to 70% LVR and 2nd mortgages up to 75% LVR.
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Why Choose The Finance Professionals for Low Doc Loans?
One reason, we specialise in Low Doc loans. As a specialist we have a deep knowledge of the policies of Low Doc lenders and can help you choose the most suited product depending on the information that you are able to provide. Our breadth of Low Doc lenders ranges from major Banks all the way through to Private Funders so you can assured that we can find a funding solution for you.
Our product knowledge is only half the story though. We are experts at putting together your loan application in a way that maximises the chance of approval. We spend the time to make sure your application is put up in the best light as we understand that typically you have got one chance for success. Additionally, we won’t needlessly apply to numerous lenders, rather we will identify the most appropriate lender and ensure that your application is tailored to their requirements. This also ensures your credit file is not damaged by multiple applications being shown. It is this professionalism you can expect from The Finance Professionals.
Additionally, once your loan has settled you will not be forgotten. We will maintain contact with you, advising when superior Low Doc deals or specials are available that may suit your scenario. We will also be there for you when you are ready to upgrade your loan to a Full Doc one.
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