What is a low doc home loan?

A low-doc loan is aimed at investors or self-employed borrowers looking to refinance, purchase or renovate a home.

The main clue is in the name – low doc. Most borrowers using low-doc loans do so because their income and outgoings can’t be assessed by conventional means. As a result, a low-doc loan is viewed as a higher risk by lenders than a traditional application. To make it worth their while, lenders tend to charge a higher-than-average interest rate as well as limitations to the terms of the contract; LVR limits, lean features and package discounts to name a few.

Typically to apply for a low-doc loan a borrower would need to provide proof of income via a combination of the following:

• Proof of ABN/GST registration
• Business Activity Statements (BAS)
• Business transaction statements
• Accountant’s letter
• Personal Tax Returns

Before you apply, it’s worth sitting down with a broker to work out how much you can realistically afford to service based on your income and outgoings. by using a broker, you could help to avoid disappointments, plus you could also uncover more lenders or product choices which you were not previously aware of.

If you’d like to speak to a professional and assess your options, get in touch with us today!