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Low Doc and Full Doc Lending Options Available for Self-Employed Applicants
What is Self Employed Low Doc Lending?
Being Self-Employed certainly has its positives, but when it comes to lending, banks seem to be making it harder and harder. They want you to jump through hoops and the document requirements seem to be growing weekly. Thankfully, there are other options available to cater for self employed applicants who are unable to provide full financials and these options are reffered to as low doc applications.
The name says it all. low doc. Instead of having to provide 2 years worth of financials relating to multiple companies, trusts and individuals, we have available options that simply require an accountantant declaration confirming your gross income or if available BAS statements from the last 12 months.
What loan amounts are available for low doc applicants?
We have access to options that gives self-employed applicants the ability to lend up to $1.5M in residential lending based on BAS turnover only and if you are not registered for GST, then we can provide up to $1M based on an accountant declaration only. No tax returns, profit and loss statements or any other financials are required.
Most lenders that offer low doc lending generally start charging Lenders Mortgage Insurance or risk fees on any low doc loan which exceeds a
60-70%. We also have access to options that provide lending up to 80% under a low doc option without incurring any lenders Mortgage Insurance. There are no unjustifiable fees, loaded interest rates and these products provide you access to the facilities that a “standard” applicant receives. There are no massive setup costs, you have access to a product that is backed by a major bank and provides all the options that you would receive being a PAYG applicant.
Here is a common example of low doc lending scenario
A self-employed plumber is looking to purchase a home who is registered for GST and looking to purchase a property up to the value of $600K. He is a first home buyer, has been operating for 3 years, but has not completed his last 2 years financials as he is very busy running his business. Business is going well and turnover is definitely reflected on his BAS statements for the last 12 months. He holds a 20% deposit which has been saved from the income received from the business. As long as the income reflected on the annual turnover from the BAS statements stacks up, then this is an ideal customer.
If you were to approach a lender that will consider an application like this, you would probably be looking at an interest rates in the 7-8% mark, 3% application fee and quarter or monthly servicing fees.
The option that we have access to will have a $285 setup cost, an interest rate in the low 5's, no risk fees and only one annual fee which covers all other costs. You will have access to an offset account which allows you to withdraw and minimise your interest also.
This is by far one of the market leading options for Self-Employed/Low Doc applicants and we strongly suggest that you contact us today and see how much you could save.
Use our Loan Comparison Calculator to understand what you could be saving on your low doc home loan.
What are the hidden catches with Low Doc Lending?
Although this type of lending is available, depending on who you speak with and which lenders you are considering, there can be some very expensive options. This can deter self employed applicants to second think their decision of purchasing property becuase it is simply just not affordable.
We have years of experience in Self Employed lending and understand that there are banks that will charge you an interest rate anywhere between 8-12% interest, an application fee of up to 3% (on half a million dollars, this equates to $15K) and then charge you up to $50 per month as a service fee.
We have actually done some homework and found that people applying for these types of products are actually more likely to repay a home loan, than your standard PAYG applicant. So how do they justify charging the eridiculous fees? Becuase they can!