Low Doc Home Loans for Self Employed with both clean credit and credit impaired
Low Doc loans are designed for the self-employed or small company borrower/s or Self Employed contractors whose financial statements may not be available. Reasons for this may encompass: Their accountant hasn’t completed and lodged their financials, short term self employed or contractors.
Australia has more than two million independent contractors or self employed with many of these businesses having their financials ready at the time of application so do not fit into the Banks format for Self Employed. We have low doc home loans for both clean credit and credit impaired for purchases and refinance up to 90% LVR and refinances to 85% LVR with cash out.
Self-Employed Australians can still get a home loan if they do not have up to date lodged Financials. It is actually quite hard for the average Self Employed Australian to get a mortgage from a bank in comparison to a PAYG worker who generally only requires 2 payslips to confirm income. Australian banks will put every obstacle and hurdle in the way to make it as hard as possible for self-employed Australians to get a commercial loan, and especially a home loan or a mortgage.
Low Doc Loans (Low documentation loans) are designed for these self-employed people who do not have up to date financial statements and tax returns which are required for a prime home loan. Generally the same features and facilities are available on prime loan are also available on a Low Doc Loan as the name indicates the difference is in the documentation. If you are self-employed or have a small business and can’t provide lodged returns then it is the way to apply for a home loan.
Although financial statements and tax returns are not required for these loans, lenders will require some form of proof that you can service these loans. For these low doc loans, you may need to provide the lender with a statement confirming your income generally certified by your accountant or Business Bank Statements or BAS Statements or a combination of above.
The main documents that can be used to verify your income are:
- 6 to 12 months of Lodged BAS Statements where the lender uses a formula of between 40 > 60% of Sales as income (depending on type of business)
- An Accountants Letter verifying your income.
- 3 to 12 months of Business bank statements
- Old tax returns (over 24 months) in combination with current financial statements.
What do Lenders look for in assessing a low doc loan?
Every lender has different policies, however there are some standard criteria for most lenders.
- Length of ABN / GST registration: You must have an ABN that has been registered (and possibly GST registered if sales are over $75,000) Most Lenders require ABN to be registered for 2 years. We have lenders that will accept an ABN registered for 6 months.
- LVR: Some Banks will accept low doc loans up to 60% LVR at standard rates, and some will consider up to 80% LVR on Purchases. Generally above 60% for refinance or cash out we will need to apply through a specialist lender.
- Reasonable income declared for the business: Lenders look to see if income and current assets are in line with Business and age. For example an 18 year old courier with no assets would be declined if they declared an income of $200,000.
- Clean credit: The major banks will not approve a low doc loan with any problems with your credit history. We have Specialist Lenders that will lend to 90% with credit impairments
- Security: All Funders will take a risk on the applicant but not on the security. Properties that are in non metro or regional population arears or unique, in disrepair or difficult to sell are usually not accepted.
- Cash out: Most Funders will not allow cash out above 60% LVR and require proof of how the loan funds will be used. ¬†We have Specialist Lenders that will allow cash out to 80% LVR.
- Debt Consolidation: Most lenders will not refinance an existing loan to Consolidate Debt above 60% LVR. We have Specialist Lenders that will allow Debt Consolidation to 80% LVR
Can I switch from a Low Doc Loan to a Full Doc Loan?
Most lenders will require full income verification such as 1 or 2 years tax returns and have a history of good repayment conduct. With other lenders there is no need to switch because low doc and full doc loans have the same interest rate
Talk to an Expert:
We have mortgage brokers that specialise in Low Doc Loans with many lenders that most mortgage brokers do not have on their books. Please complete our Application Form or Phone Direct and you can discuss your situation with an expert as it is important to deal with a broker that has several options and is experienced in dealing with Self Employed Lending.
If you wish to proceed, then we will help you to complete all the necessary paperwork and liaise with the lender on your behalf. This will include the completion and submission of your home loan application and the on-going communication between all parties until your home purchase is settled
- No tax returns or assessment notices.
- No financial statements.
- Income Verification is required by either Self Certification or Accountant Verification, BAS Statements or Business Bank Statements or a combination of above.
- Generally a higher interest rate if loan is above 60% of the property value (LVR)
- High Deposit Required