What investors should know about” Low-Doc “Loans.

Low documentation loans are flexible solutions for self-employed borrowers who may be contractors or freelancers, who cannot provide pay-slips, financial statements or tax returns as evidence of their income.

The lender will still have to do the regular credit scoring check and the borrower will still have to provide bank statements and a letter from an accountant.

The main differences between low-doc loans and traditional loans are:

·        A lower maximum LVR (borrowers can borrow up to 90%)

·         A higher interest rate

·        The applicant doesn’t have to provide tax returns/financial reports

·         Lenders will accept an income declaration

·        The borrower is required to have an ABN

·        If your LVR is more than 60%, you will need to provide BAS documentation for the previous four quarters.

·        Lenders will assess your income on the basis that 40% of your turnover is assessable income

·         If your costs are less than 10% of your turnover then more of your income will be taken into consideration by the lender, in order to assess eligibility.

·        Any loan with an LVR higher than 60% will incur a lenders mortgage insurance premium.

·        Some low doc loans will not let you buy in particular areas so do your research, to ensure that you don’t waste any money or time.

·        Some low doc loans will allow you to move to a full doc loan after a period of time.

Need a property loan?

Contact us @ propertyloans@realrenta.com and we will arrange for our lending specialist to contact you shortly.





Jason Gwerder
Monday, 9 December 2019

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