Low Doc home loans were first introduced in the US in the 1980’s and began to make their way to Australia in the late 1990’s. Initially Low Doc home loans were offered primarily by non bank lenders at higher interest rates until 2002 when some major bank lenders began to offer them at competitive rates.
Low Doc loan is short for low documentation. In this process, a lender will give consideration for a loan using low or less documentation than a traditional loan. In most instances a Low Doc loan is usually reserved for self employed people who can not verify their income with the standard documents required for a normal loan.
There are more than 30 different Low Doc home loan lenders in Australia. These lenders will offer, at times, similar products but can differ with their lending policies. It’s best to speak to one of our experienced Brokers to determine the right Low Doc home loan lender for you.
Low Doc home loan interest rates have different pricing by different lenders. It is possible to obtain Low Doc home loan interest rates at the same rate as normal home loan rates with a few financial institutions, whilst other lenders can price them slightly higher. The interest rate on a Low Doc loan can be different as a result of the assessment policy and criteria being applied by the lender.
The maximum one can apply for a Low Doc home loan is at 85% LVR. This high LVR can be found with a very small number of lenders and financial institutions in Australia in 2012.
Most Low Doc loans with an LVR of more than 60% will need LMI if the loan was using a major funder. There are 2 major bank lenders who will lend on a Low Doc at 70% LVR with NO LMI.
There are several other non bank lenders who will lend up to 80% LVR with no LMI, but in some instances they will charge a risk fee instead of LMI. Alternatively, some lenders will just charge a higher rate for this type of Low Doc loan with no LMI.
There are a few Low Doc loan lenders who lend to a borrower with bad credit. The interest rate for this type of loan is generally higher than a normal Low Doc loan, and you could borrow up to 80% LVR.
With a Low Doc loan you could have almost every type of loan available. These include:
With most Low Doc loan lenders, you are required to make an income declaration as part of taking out the loan. The income declaration forms a statement when used to assess affordability. Most lenders who provide Low Doc loans require the applicant to complete and sign an income declaration. This is generally in the form of a template which is provided by either the lender or the broker.
There are several ways to verify income for a Low Doc loan. These can range from any of the following methods:
Some lenders will look at one or two of the mentioned verification methods when assessing a Low Doc loan.
If you are seeking a Low Doc home loan and want to find the lender that best suits your needs, then give us a call or send us your contact details using the contact us forms on this website. We would love to hear from you.