Low Doc Loans Can Meet a Variety of Needs including Property Investment
Financial needs come in all shapes and sizes. That means that sometimes a certain situation may not fit the typical approach to paperwork. You may have a steady income but it may come in the form of cash, commission or some other method that isn’t easy to document. You may be self employed or a freelancer. Or you may not receive regular pay stubs or have an easy means to prove your salary. In other words, you aren’t a typical company employee. That can make it tricky when you want to secure a loan. Even if you have a great credit history not having a clear cut record can make it difficult to go through traditional lending routes to secure a loan. Fortunately the financial services industry has designed products for these situations—low doc loans.
While you may think that your need for low doc loans is unique, the fact of the matter is there are a lot of people out there like you. These are people with a good steady income that is difficult to document. Low doc loans can help you solve this problem and help you get the financing you want and need. Of course you’ll need to shop around to make sure you are getting the best deal possible but there are a variety of low doc loans available to meet all kinds of needs.
The key reason that most people pursue low doc loans is that they just can’t qualify for financing under normal conditions. Because they don’t require a mountain of paperwork, low doc loans can be far more convenient and easy to apply for than traditional financing. There are a variety of types of low doc loans available so chances are you can find the type that you need.
On the downside, low doc loans are considered to be more risky than traditional loans. That means you will pay more to borrow money this way. This can affect you two ways. Because of the added risk, low doc loans will carry higher interest rates than normal loans. In addition to carrying higher interest rates, low doc loans may require a larger down payment that a regular loan. If higher interest rates and a larger down payment weren’t enough, some lenders attached extra fees to their low doc loans. Be sure to check your offer from the lender carefully in order to see what your overall cost to borrow using low doc loans will be.
Despite the fact that low doc loans cost more than traditional loans, they can be an excellent way for borrowers who can afford the monthly payment but don’t have the necessary documentation of their income to get the money they need. As with all financing, it is up to you to do some comparison shopping in order to find the low doc loans that work best for you. With a little homework you can find low doc loans that carry the reasonable terms and are affordable. In no time at all you’ll have the money you need without providing a stack of paperwork.
Investing in property has always been seen as a safe and effective way to build wealth.
The tangible evidence of your investment coupled with the rental income and possible tax concessions make it easy to see why an investment in property can be an attractive choice.
If you already own your own home, you will be familiar with the property purchasing process; it is not that difficult to take your next steps in purchasing a property for investment.
Utilising the equity in your home to finance an investment (property, shares etc) is a great way of putting your property to work for you. This will often be a more cost-effective option than taking out a personal loan.
When the return or income you receive from your rental property is less than the expenses of owning that property (interest on your loan, council rates etc) – the property is said to be negatively geared.
In some instances the Australian Taxation Office will allow this ‘loss’ incurred on the investment to be offset against other income, as a tax deduction.
Example:
| Rent received | 9,000 |
| Expenses incurred | 12,000 |
| Loss which may be claimed as a tax deduction | 3,000 |
*Consult with your tax adviser to see how negative gearing can be applied to your personal situation.
The old adage that if an investment opportunity sounds too good to be true, it usually is – holds true. Always be sure to research your investment decision thoroughly. Be sure to seek independent property and financial advice.
If you are turning to property investment for capital growth, tax benefits and as a retirement strategy, it is very important to learn as much as you can, especially if it is an area you’re not completely familiar with.
