What is a low doc home loan?

Home loans span across many lenders and come with varying benefits to cater to individual needs. Selecting one that matches your particular needs and circumstances is important. If you’re self-employed a low doc home loan might be your best choice.  

What is a low documentation home loan?

A low documentation home loan, known as a low doc home loan, is a special lending product provided by a huge range of banks, credit unions, and building societies. These loans help borrowers who may not have the proper paperwork such as tax returns and financial records to apply for a standard home loan, and are typically offered to the self-employed who have a good credit history.

While you may not be required to provide the relevant documentation, like pay slips, you will still need to be able to declare your income, prove that you can make the repayments and sign a declaration stating these points. 

Low doc home loans generally have a loan to value ratio (LVR) of between 60-80%, meaning that you can only borrow 60-80% of the property value, and pay the rest as an upfront deposit. They tend to also incur higher interest rates and ‘risk’ fees, they are considered a higher risk to lenders. Occasionally you will be asked to provide collateral against the loan in case you are unable to make the repayments.

To help you secure a low doc home loan you should have a clean credit history and a good repayment record. This will put lenders mind more at ease before lending you the required home loan amount.

Check out RateCity’s list of low doc loans to find some of the cheapest in Australia today. Carefully read their features and fees to make sure you know if the loan is suited for you, before you apply.

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