Important Facts About Low Doc Home Loans
Every individual, whether a king or a pauper, dreams of having their own sweet space called home. But due to lack of requisite amount of money this dream remains unfulfilled many times.
But nowadays one can easily go for low doc home loans and fulfill their long-term desire of building their own house. Once a person applies for a loan he/she is presented a checklist with the list of required documents which can further become a struggle for an individual.
The list includes Bank Statement, Advanced processing check, income proof, residence address proof, Job Continuity proof and a dozens more.
While it might be easier for people working in Multi-National Corporation to arrange the necessary documents, it would be almost impossible for business-owners to present the same.
The solution is low doc home loans. They are cheaper and are meant especially for self-employed people who can apply without the usual documentation. The basic motive is to show a bank/ lender that you can be trusted.
When should you opt for the low doc home loans?
- If you are an individual business owner and do not possess the necessary documents mentioned in the checklist
- In case you don’t have the financial statement or updated tax returns
- Your business may be too complex
Eligibility and Application Process
Though the eligibilities are lender specific but here are some most common criteria:
- When Low Doc Loans were introduced they were limited to only a few lenders and that too at a very high-interest rate. But with time it is made readily available
- In order to get a Low Doc Home Loans, one must also have a good credit history, existing credit performance and good previous record of repayment of loans or unsecured debts. This would help in building trust for the lenders.
- Low Doc Home Loans have an LVR (Loan to Value Ratio) which is roughly between 60-80 % of the net value of the property. The remaining amount must be paid up front.
- Though the application process is not at all complex still you need to provide documentation as evidence of your fixed regular income.
- As mentioned above one should deposit between 20-40 %
- Proof that you are working in the same industry for 12 months or more.
List of Documents Required for Low Doc Home Loans
- Signed Borrower’s Income: Since you are self-employed and it would not be practically possible to show your income statement, you can provide the lender with a signed borrower’s income declaration in its place.
- Your Registered Business Name:
- GST Registration Document:
- Personal and Business Bank Account Statements:
- Business Activity Statement: Lenders would like to see at least 12 months work of statement.
- Letter from your Accountant:
Quick Tips before you apply for Low Doc Home Loans
Make sure you look for the ones that would hurt your wallet less. Below are some quick tips for you that you can consider before applying for a Low Doc Home Loan.
Interest Rates: Do everything it takes to lower the interest rate because a home loan is not a short-term commitment.
Lump Sum and Extra Repayments: Try to reduce the interest rest using lump sum or additional repayments at regular intervals.
Weekly and Monthly repayments: While applying for a home loan you might have various options to choose from, viz, weekly, fortnightly, monthly repayments. So, opt for the repayment that best fits your need.
Mortgage Offset Account: An offset account will save you a lot of money because you would offset the money to your personal bank account with the interest owing to your home loan.
Category: Loans
