Low Doc Home Loans
Low Doc Home Loans are designed for self-employed borrowers who are not able to submit conventional documents to verify their sources of income. These are sometimes incorrectly described as ‘No Doc Home Loans’, which are no longer available in Australia. It can be difficult for borrowers to get approval for Low Doc Loans, so it’s often best to work with a mortgage broker who understands credit policy and document requirements of different Low Doc lenders..
How Do You Qualify for a Low Doc Home Loan
The primary reason to use a low doc home loan is because you don’t have the conventional documents such as pay slips to prove your actual income. For instance:
- Your business may have complicated structure
- You have not yet updated your tax returns
- Your income may have increased since your last filing of your tax return
- Your assets have been depreciated, which cannot be qualified as actual expense
- You have distributed your income to your family members from your trust
Low Doc Home Loan Requirements
Most banks and lenders see self-employed individuals as a higher risk, so they tend to follow stringent guidelines when evaluating their home loan applications. They usually require recent tax returns and assessments for yourself as well as the business. The process can be lengthy and the paperwork can really pile up. Low Doc Loans however may be approved without tax returns, and the lender may instead rely on:
- BAS returns
- Profit and loss
- Balance sheet
- Bank statements
- Contracts for services or goods sold by the business