What is a Low Doc home loan

A Low Documentation (Low Doc) home loan is an alternative for those who cannot supply conventional proof of income required for typical home loans. 

Low Documentation (Low Doc) home loans are useful for borrowers who are unable to provide conventional proof of income required for a standard home loan. Those who are self-employed often fall within this category. Low Doc loans are sometimes referred to as Modified Documentation Loans.

What you need to know about Low Doc home loans

Low Doc home loans are often perceived as higher risk by the lenders, because the income of the borrower cannot be substantiated by conventional means. As a result, a Low Doc loan would usually have a higher-than-average interest rate; plus more limitations in terms of the maximum Loan to Valuation Ratio (LVR), available loan features and package discounts. 

A self-employed borrower would typically need to provide proof of income using a combination of the following:

  • Proof of ABN and/or GST registration
  • Business Activity Statements (BAS)
  • Business Account transaction statements
  • Accountant's letter
  • Personal tax returns

Before applying for a Low Doc home loan, it's worth sitting down with an experienced mortgage broker to work out your net income and the amount of loan you can realistically afford to service on a regular basis. Doing this could help to avoid disappointments, plus you could also uncover more lenders or product choices which you were not previously aware of.

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