Aaron Vandiver
Are you planning to buy a house but don’t have enough documents to pass a loan from the bank? Low doc home loans can fulfil your dream of buying a home. A low-doc loan is the best for a self-employed person.
What Is A Low Doc Home Loan?
It is a flexible mortgage loan for self-employed debtors. You won’t need to provide a PAYG pay slip or tax return like a traditional loan.
The lenders of low doc loans grant loans by verifying a few papers. To be eligible for the loan, one needs to produce income proof (Any One Or Two Forms):
- Business Activity Statements: You need to submit at least twelve months’ statements, they will show your business turnover.
- Business Bank Statement Or Bank Statement: Some lenders check your six-month transaction.
- An Accountant’s Declaration: An income form signed by an accountant as income proof.
- Self-Verified Income Declaration: A declaration where your information about your earnings and pledge to repay the loan.
Who Should Attain Low Documentation Loans?
- A new business person cannot show past income stability. For them, it is the best option for a loan.
- Retired people don’t have any investment income.
- Daily wage workers whose income is low.
- Self-employed people whose business turnover is not so high.
- Your income and assets document is not sufficient to pass.
What Will Be The Interest?
Nothing comes for free; interest is also high since the risk exists. Because you don’t have proper documents, the risk of repayment is there, they will charge a minimum of one per cent higher than in the low doc loans and additional process fees added to the loan.
How Much Should I Deposit?
In low doc loans, there are many risk factors, so the lender wants at least 20 per cent of the down payment. Because it becomes tougher to give more than 80 per cent of the property value, sometimes lenders can charge even more down payment if you have a no-doc loan.
Final Takeaway
Low doc home loans are better for self-employed, freelancers, and young wagers. Because of global inflation, low doc loans are also becoming like banks. But low docs are much more hassle-free regarding paperwork. The high-interest rate can burden them as their income is low. Before applying for a loan, check the interest rate against the loan, and can you clear your loan in the future.
