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Low Doc Loans – The Basics

Posted by: Oyster Financial

As you probably already know, there are a lot of different types of loans available. So much so that it can be fairly difficult to determine what they are and which one is best for you. This blog post will look at the ins and outs of low doc loans! Hopefully by the end of this blog you will have a solid idea on what a low doc loan is and if this type of loan is suitable for you.

What is a low doc loan?

A low doc loan is a type of loan that doesn’t involve the typical documentation to identify the potential borrower’s earnings. Low doc loans do not require as much paperwork as the typical loan as verifying income is not as critical. This therefore makes low doc loans very appealing to those individuals who are self-employed and cannot provide the normal proof of income.

income loan

Who can apply for this loan?

As said above, it is usually the self-employed that apply for this type of loan. Lenders typically treat the self-employed as high risk for normal loans because of the lack of verification documents. But usually those who are self-employed do require a loan at some point, so the low doc loan helps to overcome this barrier.

With the low doc loan, lenders accept other forms of documentation to allow the self-employed to borrow. Documentation such as business activity statements (BAS) and self-certified income statements are accepted by lenders.

What you need when applying for a low doc loan?

Like all loans, you will have to provide the lender with a variety of components in order for the loan to be approved. For your low doc loan there are 4 key things that will need to be provided:

  1. A deposit is required when applying for the loan (usually 20% of the purchase price). If you are unable to meet the deposit amount then there are other options available to you (i.e. a low deposit loan with a guarantor).
  2. A BAS that has been lodged with the Australian Taxation Office.
  3. An ABN, if you have had that ABN for around 2 years then that’s even better!
  4. A completed income declaration form. This is the component that will vary the most depending on your lender. Things such as your income, information on the loan and your ABN must be declared on this form.

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