There are a lot of cases where you may not be able to offer your lender the documentation necessary for a standard Low Doc Home Loan, particularly if you have a small business or are self-employed. It is fortunate that a Low Doc Loan or No Doc Loan can help. Here is a simple guide to the advantages that these types of loans can offer.
Low Doc Loan for Self-Employed
The Low Doc Loan application process can sometimes be a hurdle if you are saving up to purchase a home. These loans are generally designed to assist people who have a deposit saved or existing equity but do not have access to the tax returns or financial statements required for a traditional home loan.
On the other hand, a Low Doc Loan allows you to apply for money without the regular red tape. As with any key fiscal decision, weigh the merits and demerits and define whether this is the best strategy for your current situation.
Simple Underwriting
At least there is some good news if this is the only loan you can qualify for. Since you are not testing anything, there is not much you can do. Your lender will check out your credit history to confirm you qualify. The underwriter will then take a close look at the credit profile as well as the residential home appraisal. When those two things check out, it is generally clear to close.
Less Paperwork
The Low Doc Loan application process is usually simpler, but still, you have to provide evidence that you are getting a regular income. You will just need to provide a letter from their bookkeeper, a bank statement showing any business-related expenses, as well as a Business Activity Statement. Learn more about loans at: https://www.govloans.gov/
Very Attractive
If you are one of the few who is right for a Low Doc Loan, you should know that banks consider this loan to be a little riskier than a normal mortgage. This is just because you will not have to prove employment, income, or anything else that has to do with cash. This is the reason why a Low doc loan is a very attractive loan for lots of people, but just for a few.
But There Are a Few Criteria
Certain criteria are often set to make sure that you can repay the loan. Generally, there are some common needs. First, you have to prove employment. This is completed with a business number that has been recorded for twelve months or more.
As with a standard loan, in most cases, you have to put down around twenty percent deposit. Also, you’ll need to demonstrate a strong credit history, along with evidence of existing credit performance which could include existing loan repayments or unsecured debt. A low loan-to-value ratio is also better, along with a strong net asset position. Each lender’s preferences will differ, so contact a trusted adviser to find out if a Low Doc Loan could help you. To learn more about loans click here.