Could a low doc loan help you get your dream home?

By the resi financial blog team, 18 February 2014

Low Doc loans for property buying

Self-employed Australians looking to secure a home loan may find themselves coming up against a brick wall with some lenders. Due to the inconsistent nature of being your own boss, with fluctuating paychecks and workload, it can be difficult to prove to a financial institution that you'll be able to make regular repayments in full and on time. 

However, there is a home loan option for these individuals, one which allows them to make the most of their own circumstances in order to secure finances to put towards achieving their own real estate goals. 

For example, usually when applying for a home loan, you need to provide evidence of consistent income and savings to help prove you're able to be responsible with money, as well as giving the lender a reason to believe you'll be able to make repayments. 

Understandably, this can be difficult for those who don't have a regular income. However, the solution comes in the form of a lo doc loan, which stands for low documentation loan, and is an option for those unable to provide the normal pieces of information for lenders.

While this means that these self-employed people can get their home loans and purchase property as well, these products often come with larger interest rates due to the bigger risk associated with this type of lending. Furthermore, deposits are often larger as well - sometimes skyrocketing as high as 40 per cent. 

There is a silver lining, though. If you obtain the right paperwork and approach your lender, often it's possible to have your interest rate, fees and charges reduced by having your loan reassessed with this new information factored in.

Getting in contact with a financial expert is the best way to approach finding out if a lo doc home loan is the right option for you! 

Categories: Home Loans, Personal Finance