Self-employed? Investigate lo doc home loans today

By the resi financial blog team, 25 November 2013

Investigate lo doc home loans

The world of home loans is vast, and there are options for (almost) every single application. One of the most frequently asked questions concerns self-employed Australians, and whether they are able to pursue their property goals with ease.

Fortunately, there is a home loan option available for those with an irregular income, or who are unable to provide all of the usual documentation needed during the application process.

Traditionally, when you apply for a home loan you need evidence of consistent income and savings. This helps to convince the lender you're a trustworthy borrower.

This can often be difficult to prove for many self-employed people, who may not necessarily have a regular cashflow coming into their home. However, the solution comes in the form of a lo doc loan.

Lo doc, or low documentation, loans are an option for people who don't have the required paperwork for a regular loan application. With the higher risk associated with these loans, they often feature a higher interest rate than normal mortgages, although providing more documentation can help to lower this.

The deposits for these home loans are usually substantially higher as well - sometimes reaching 40 per cent of the homes value. Naturally, there are also higher fees and compulsory mortgage insurance to cover the risk taken by lenders in these instances.

However, the good news is that if you obtain the proper paperwork further down the track, you can usually have your home loan reassessed. This can result in a reduction of your interest rate, fees and other expenses as your financial position becomes more stable in the lender's eyes.

The criteria for lo doc loans will vary, so get in contact with a financial expert to discuss the options available to you, in order to begin you on your way to property ownership!

Categories: Home Loans