Low Doc Home Loan
The best place to start your home loan search
What is a Low Doc Home Loan?Low Doc (short for Low Document) home loans are a recent innovation in Australia and are targeted at contractors and the self-employed, who often lack current tax and financial records. Traditionally it has been more difficult for the self employed to obtain loans because banks had a preference for borrowers on guaranteed (ie PAYE) incomes.
The Low Doc Home Loan helps borrowers with irregular cash flow or who may not have current financial statements, providing they have sufficient equity in an existing property or other assets.
Low Doc loans can be variable or fixed rate loans, or lines of credit, and may include an offset facility.
Low Document loans attract a higher rate of interest than other types of loans because lenders perceive the risk involved to be greater.
Because the employment situation in Australia is changing, bank and non-bank lenders have had to become more flexible in their approach to lending and so Low Doc loans are becoming more common.
Low Doc Loans
Features of Low Doc LoansThe Low Doc loan is usually just a standard fixed or variable rate loan, but with different credit criteria i.e. low documentation.
Since full documentation is not required the risk to the lender is higher and this is reflected in the interest rate and maximum loan-to-valuation ratio (LVR) of 65 - 80%. Interest rates are often 0.5% to 1% higher than standard loans depending on risk but competition is bringing rates down and the rate is often reduced once you have established a good track record of repayments. Lenders Mortgage Insurance is not normally required on loans under 80% LVR.
Other useful features can include offset accounts, redraw facility, direct salary crediting, portability and repayment options depending on the lender and type of loan.
Benefits of Low Doc Loans
Tips and strategies
Example Rates and FeesVariable Rate Home Loan NO FEES (June 2016):
*Based on $250,000 Loan over 25 years.
You can apply over the Internet and ask for a free no-obligation quote on a Low Doc Loan.
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