Most lenders look for the following attributes on your low doc home loan application to decide your eligibility for the loan sought, there may be other factors that the lender may take into account but the 7 points outlined below are the key components.
Your ABN must be registered for a minimum of 12 months and if you are declaring an income greater $75,000 you will also need to be registered for Goods and Services Tax (GST). Some lenders will not accept an application unless you are GST registered, irrespective of your declared income. The longer your ABN and GST registration the better, it demonstrates longevity and consistency as a self-employed business owner.
Lenders look particularly closely at your credit file and the repayment history of your debts, as they cannot fully verify your income. The major banks are far less forgiving of any problems with your credit history. We do have options if you have a bad credit history with some of our specialist lenders.
A minimum deposit of 20% is required for a purchase or 20% equity for a refinance. We do have access to both 85% & 90% low doc home loans, but beware, the higher the percentage of your property value that you are borrowing, the higher your interest rates and fees will be.
Net asset position
Your net asset position is the total value of your assets minus your current liabilities. The higher this figure the better and it must be positive.
Conduct on existing credit
When you apply for a low doc home loan or low doc investment home loan you may be asked to provide a recent statement on any existing mortgages held and any unsecured debts such as credit cards and personal loans. This is to prove that you are making the obligated payments on these debts and that they are being managed within your credit limits. For refinance transactions it is a standard requirement that you provide 6 months statements for your existing mortgage(s) to be refinanced and generally 3 months statements for any other debts you wish to consolidate (or pay out) from the proceeds of the loan.
Low doc home loan security location
Lenders consider low doc home loans to be a higher risk, hence the restriction to 80% of the property value, in the main. By also restricting the security location to what they consider to be lower risk locations reduces the lenders overall risk. We know which locations are acceptable to the lenders, so it would be wise to check with us first.
Or ‘cash out’ as it is often referred to. This is where an applicant is seeking to refinance an existing debt and obtain further funds for personal or investment purposes. Some lenders limit or require evidence for the purpose of the cash out when applying for a low doc home loan.