Low Doc Loans are facilities offered by lenders to specifically meet the requirements and accommodate the needs of self-employed borrowers. Generally Low doc require alternative income verification which includes but is not limited to a self-certification of income by the borrower, an accountants letter, bank/trading statements and/or BAS statements. The requirements vary between lenders and generally combine 2 or more of the above low doc documentation. Often self-employed borrowers do not have current up to date full financials, and a Low Doc loan provides a great alternative to low doc borrowers enabling them to achieve their lending requirements with minimal fuss
Low Doc loans can be used to purchase a home for owner occupation, an investment property for residential rent and also, in some cases, purchase commercial property for occupation and/or lease. Similarly, there are many low Doc loan facilities available whereby borrowers can purchase and or refinance motor vehicles, plant & equipment, fund a business for expansion or growth, fund a shop fit out – the list goes on. In many ways, depending on the overall loan product structure, often a low Doc loans can be comparatively better than a secured business loan – most of which are historically secured by a borrower’s principal place of residence. The availability of low doc loans in the commercial asset space allows the actual asset to provide the security for the low doc facility – thus allowing the borrowers to keep their business and personal assets separate. This is a good strategy for both asset protection purposes as well as for taxation purposes.
In many cases, low Doc loans are very similar to a fully verified home loan in respect of the features available to low doc borrowers under these facilities. Self-employed borrowers have in most cases a choice of fixed or variable rate options with low doc loans. It is extremely advisable that if you are considering a low doc loan you seek the advice and assistance of a low doc loan specialists and this is a very niche section of the lending market and one in which low doc specialist brokers are far better placed to assist you adequately with your low doc loan requirements.
Low doc loans often feature a slightly higher interest rate but as you are not required to furnish the lenders with as much documentation as you would with a fully verified loan, the speed and ease with which these low doc loans can be processed more than compensates for the variance in interest rate. In addition, some low doc facilities are as competitive if not more so than fully verified loan products. Without any doubt, low doc loans provide and invaluable and essential service for self-employed borrowers