Low – documentation or no – documentation home loans

Low or no-documentation loans are exactly what they describe. These loans require very little or no income documentation to get approval. They are typically used by borrowers who are self-employed, have variable income or do not have tax returns or financial reports. Most low documentation loans now require 6-12 months BAS statements with receipts.

Just because you don’t provide full financials, you still have to self certify

Bear in mind that while you may not need to prove income by providing the same kind of documentation that you might for a full document loan, you still need to be able to pay back your loan and will most likely be required to self certify your ability to make the loan repayments on top of providing limited financials. You should work through repayments and plans very carefully with your broker or lender.

Is there a limit to how much I can borrow?

Most mainstream banks won’t go beyond $2.5 million, but quite often you can borrow more from specialist non conforming lenders at interest rates that compete very favorably with the mainstream banks and lenders. If you think a Low Doc Loan might be for you or you just want to check your options call us on 13 LOAN (+61 2 9249 3739 direct) or fill out the form below and we will return your call within two business hours.

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What are the LVR (Loan Value Ratio) requirements?

Traditionally banks have only allowed a maximum 80% LVR maximum for low document loans. Loans with LVRs higher than 80% typically go to non conforming or low documentation lenders. Low Doc loans of up to 95% of the market value of the property (LVR) are the highest available but the interest rates, LMI and associated fees truly reflect the lenders additional risk. Talk to a local mortgage broker for your options.

When will I have to pay LMI (Lender’s Mortgage Insurance)?

Apart from the LMI starting points, the real differences between low-doc loans and fully verified loans start to get magnified where the amount borrowed is greater than 80% of the market value of the property. The major lenders won’t actually lend beyond 80% on a low-doc basis. This is where the low doc specialist lenders come into force. For normal, fully verified loans, LMI usually kicks in at above 80% of the market value of the property. For low-doc loans, LMI normally kicks in at 60%. The low doc LMI rates start at around 0.3% and go up to about 1.00% at 80% and can get as high as 3% for lower LVR amounts (This option can be useful in specialist cases where you have reached your maximum borrowing capacity with a mortgage insurer / mainstream lender and you are seeking further funds.)

Make sure your broker or lender understands your situation and don’t leave anything out

Ensure your broker or lender understands your situation precisely – why you are utilising a low or no document loan facility and your future plans.  Don’t leave anything out as there is nothing more disappointing (and possibly terminal) in unexpected ‘bad news’ or ‘additional information’ coming to light after a loan application has been submitted.