Unique mortgage finance solutions for self-employed people in Australia, low doc loans are no less than a boon for those who cannot provide standard documentation including tax returns and other financial statements to get an ordinary loan approved. But, that’s just a primer. Read on to know about 4 things you didn’t probably know about low doc home loans.
If you’re someone who does not qualify for traditional mortgage finance solutions in Australia, its worth considering loan packages that require very little documentation at the time of application. The application for these has to be submitted in writing but you’re not required to produce paperwork to back your stated income, asset ownership etc.
Each coin has got two sides and it’s important to take a good look at both to get the complete picture. Below you’ll find a compilation of 4 pointers on low doc home loans in Australia that you didn’t probably know:
- The interest rate for low doc home loans is going to be slightly higher than traditional loans. So, don’t be surprised even if a reputed lender specializing in such mortgage finance packages is offering low doc loans that appear expensive. But, it’s a good idea to speak directly to a company representative and find out if the interest rate can be relaxed in case your application is backed by few additional documents.
- Processing fees and other charges for low doc loans can (at times) be inflated beyond your expectations. So, make sure you’re dealing with someone who cared to display the complete information on official website or provided it in writing before processing your application.
- Mortgage insurance may or may not be compulsory. While a handful of lenders do not require you to have mortgage insurance in case the Loan to Value (LVR) ratio is below 80 percent, few others may have a complete different set of rules in place. That said – it’s important to inquire about features of a low doc home loan well in advance (several days before signing on the dotted line).
- The deposit required for such loans are generally higher. In most cases, deposit is going to be in proportion to the range of benefits provided. For example, if you want a low documentation loan for property purchase or refinance at a low & flexible interest rate, you should be prepared to make a deposit as high as 40%. While most lenders offer low doc loan packages that involve minimum deposit of 20%, there’re others that will consider 15% deposit as well.
These loans (provided you’re dealing with the right lender) come with a host of features but they certainly aren’t one-for-all mortgage finance packages. If you’re unsure of whether a low doc low is right for you or not , consider carrying out a short research right away. If full doc loan isn’t something you qualify for, it becomes all the more important to get the complete picture to make an informed decision