Put simply, a low doc loan or a no doc loan as it is sometimes called, are for borrowers unable to disclose or verify their full income details.
For a traditional mortgage, you will need to have been in business or employed a minimum of 2 to 3 years with full tax accounts and other documentation. A low doc loan is a mortgage where reduced documentation is sought by the lender to verify the borrower’s income. No doc loans do not require disclosure of income or asset / liability position.
Low doc and no doc loans offer the same flexibility and features as standard home loans, some without any interest rate premium. Others revert to the standard rate after a qualifying period.
Low doc home loans are usually slightly more expensive than traditional home loans due to the higher risk profile of the customer perceived by the banks. They are used predominantly by people who are looking to buy a home, buy an investment property or refinance existing housing property and who don’t have the standard financial paperwork such as pay slips or tax returns which a standard home loan or investment loan requires.
Clients we have helped with a low doc loan or no doc loan are those who are self-employed, borrowers who have been rejected by traditional lenders, independent contractors, investors, no-financials borrowers, CRAA (credit) impaired, ex- bankrupts and even those who have had arrears on their current mortgages.
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