Low doc home loans can provide an easier mortgage finance solution for business owners or self-employed people who have income and assets, but are unable to provide the required financial statements or tax returns at the time of application, so if you own your own business or you’re self-employed and are finding it difficult getting together all of your financial details, a low doc mortgage could give you the means of securing a home loan.
Low doc home loans are the perfect alternative for borrowers who struggle to come up with all financial documents for a loan application – an issue faced by many in Australia’s self-employed sector.
In common with all home loan applications, low doc mortgage borrowers are generally required to submit a standard loan application. However, instead of providing, say your PAYG statement, the self-employed low doc home loan applicant would provide a verified Business Activity Statement when they apply for a low doc home loan product.
Low doc home loans for an investment property?
Borrowers can apply for investment or owner-occupied home loans and even small business loans.
A loan-to-value ratio (LVR) of 80 per cent is considered to be standard with these products, though higher amounts may be available through some lenders.
Because of the added risk to the lender in providing this type of loan, be aware that special conditions may apply and low doc home loan borrowers will likely pay a higher rate of interest than a comparable loan to a PAYG applicant.
Lenders mortgage insurance (LMI) commonly applies to borrowers with a deposit of less than 20 per cent of the property’s value. However, low doc mortgage borrowers may be required to take up LMI for loans exceeding 60 per cent of the home’s value.
The good news is that there is some choice in how you pay these fees.
Most lenders provide two options for paying mortgage insurance: an upfront payment, or cover the costs using your mortgage by increasing the value of your loan. The choice is yours!
If you are having a hard time sourcing the necessary financial documents or you have recently been knocked back by a bank, a mortgage broker can help you through the low doc home loans application process, save you time and aid you in getting back to focusing on what matters most, running your business.