What is a Low Doc loan?
A Low Doc (Low Documentation) loan is a loan suitable for self-employed people who are looking to buy a home or an investment property without the financial statements or tax returns usually required. Low Doc loans offer more flexibility to those who have income and assets but don’t have the traditional income evidence. If you have fluctuating income or your tax returns aren’t up to date, a Low Doc loan may be the best solution for you.
Low Doc Home Loans are designed for self-employed Applicants who are unable to supply up to date Tax Returns to confirm their income. Instead, Borrowers can substantiate their income using a number of alternative methods which can include:
- Supplying BAS Returns for the past 6 to 12 months.
OR
- Supplying an Accountants Letter confirming income declared.
OR
- Supplying an Accountants Letter confirming income declared.
You may be required to supply more than one of the above, as that varies by lender. As a guide, in order to obtain the most competitive rates its best you provide your last 12 months BAS returns.
Your ABN should also be registered for GST, with an ideal period in excess of 12 months. However there are lenders that will accept 1 day GST registration.
What is the maximum amount I can borrow on a Low Doc loan?
It varies from lender to lender, but generally speaking the maximum you can borrow on a Low Doc loan is 80% of the property value.
For loans up to 60% of the property value, there is no lender’s mortgage insurance (LMI). However, most lenders require LMI for loans between 60% to 80% of the property value.
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