Low doc home loans are home loans developed specifically for the self employed segment of the Australian market.

The applicant is required to complete a mortgage application as with a full doc home loan. However, instead of providing proof of income, they only need to sign an income declaration document. In many cases no additional financial documentation is required. Sometimes the applicant is also required to provide a letter from their accountant confirming that the accountant believes that the applicant is able to afford the loan they have applied for.

Buying a Business

Most lenders who offer a low doc home loan product will allow the applicant to use some of the equity in their home for business purposes or to purchase an investment property.

If you require some funding for a business expansion, additional stock, equipment or for any other business purposes – one of the cheapest sources of business funding is the equity in your home. Instead of applying for a business loan and paying a high rate you could access the equity in your home for half the cost.

Who can borrow?

To qualify for a low doc home loan you will need to have a registered ABN for at least 2 years. This will demonstrate to the lender that you have at least 2 years business experience and are not a newbie.

If you intend to declare an income which is greater than $75,000, you should also be registered for GST for at least 12 months. No lender will be able to accept a low doc loan application from a borrower who is claiming to earn $200,000 pa but is not registered for GST.

Features of a Low Doc Home Loan

Low doc home loans generally come with the same features as full doc home loans. Such loan features as fixed or variable rates, offset accounts, redraw facilities are generally available.

Many mainstream lenders such as the banks will impose certain restrictions on low doc home loans. Generally borrowers looking to access more than 60% of the value of their property will be up for Mortgage insurance. This can make a low doc home loan far more expensive than a full doc loan.

Low doc home loans are not available beyond 85% LVR. Some lenders will charge a slightly higher interest rate but will not impose an LMI fee. Others will have a lower rate but will have LVR restrictions etc.

Most low doc home loans come with a slightly higher interest rate or have higher fees than a comparable standard home loan.

Is a low doc loan right for you?

If you're self-employed and are considering a low doc home loan, talk to us. We have access to a large number of specialised funders who will be able to offer you a very competitive Low doc home loan deal.