A Low Doc Home Loan is a regular home loan or investment loan that does not need income verification like financial statements, tax returns, or payslips. Rather than providing this paperwork, the lender will generally ask you to sign a named financial statement form indicating your earnings. Then the lender uses your stated earnings in its assessment.
Are Low Doc Home Loans Just for the Self-Employed?
Yes, because of variations in the NCCP Law, lenders will just accept freelancers and self-employed borrowers for their Low Doc Home Loans. On the other hand, there are a number of lenders that provide PAYG loans with evidence of reduced income.
The reason lenders accept self-employed borrowers is that there are genuine causes why they cannot be able to show their earnings, for example – not having finished a recent tax return. On behalf of a PAYG borrower, there are far less genuine causes, so lenders ask why they wouldn’t give their pay stubs as proof of earnings.
Do I Need to Tell My Lender about Liabilities and Assets?
Of course, you will need to show an itemized statement of assets and liabilities with most lenders. Even some lenders include this on their financial statement form. Lenders look to ensure your age, earnings, assets, and liabilities match. For instance, a 60-year-old person with a reported earnings of $200,000 per year, but with few properties would raise eyebrows.
How Much Can You Borrow with a Low Doc Home Loan?
The extreme any lender will approve a Low Doc Home Loan is a 90 percent Loan-to-Value Ratio (90 percent of property value). This is a more exclusive loan, usually bring up as a high loan. The inexpensive Low Doc Lenders won’t lend more than 80 percent Loan-to-Value Ratio.
Usually, if you’re borrowing equal to a 60 percent Loan-to-Value Ratio, you don’t have an extreme loan amount. Actually, you can borrow $10,000,000 or even more, all with no evidence of income. Whether you are borrowing an 80 percent Loan-to-Value Ratio, most Bank Low Doc lenders will limit your loan to $1,000,000.
Why Should I Use a Mortgage Broker for a Low Doc Home Loan?
Due to the great difference between lenders, it is important that you speak with a professional to find the right deal for you. Actually, with Low Doc Home Loans there are basic loans now and specific package discounts available from several lenders, like with full doc home loans! Also, there are important variations between lenders in their Lenders’ Mortgage Insurance Premiums, application fees, as well as appraisal costs that they will waive. This fact isn’t published by lenders, but is known to all mortgage brokers!
How Can I Change from a Low Doc Home Loan to a Full Doc Home Loan?
Several lenders will let you change to a full doc loan for a small charge after two years of seamless conduct. Several lenders will need complete earnings verification like tax returns. If you want to change to a fully documented loan or when you try to change once you don’t have two years of decent conduct. With many other lenders, there is no requirement to change as Low Doc Loans and Full Doc Loans have similar interest rates. Read more.