No length documentations – Getting low doc home loans is a breeze
Low doc loans are especially designed for Australian residents who do not need a traditional home loan to buy a residential property. In order to avail a low doc home loan, a person just needs to submit an application. No other documents including the proof of property ownership, income certificates, affidavits etc. are required in this case. A self-employed person, therefore, can just state his or her income to the lender and self-verify it. No supporting documentation is required and therefore, self employed Australians can get low doc home loans approved very quickly!
A great time and money saver for casual workers or self-employed people
Low doc loans are among the best options available for self-employed business owners and professionals who’ve some savings in the bank or have an equity but face great difficulty in proving a ‘regular income’ in writing. These people can get traditional loans as well but they often cost more and require an applicant to go through a lengthy process.
People with a not-so-good credit history can also avail low doc home loans. Lately, many people have reportedly abused low doc loan options as well. They do so by not declaring all of their income to the tax department. It is important not to indulge in such tactics in order to save a little money because penalties are far bigger than the money anyone can save!
Who should opt for a low doc home loan?
A person should opt for quick and relatively inexpensive loan options only if they fall into the categories listed in the previous section. As with any loan, a borrower should be serious about paying back the entire loan its entirety by the time the agreed loan term is over. Generally, low doc loans cover up to the 80 percent of the residential property a person intends to purchase. The remaining 20 percent cost of the property has to be provided by the borrower. Since lending institutions do not ask for documented proofs of incomes, assets and liabilities, they generally require borrowers to opt for mortgage insurance too.
Low doc loans are great but…
These loans are no doubt one of the best options available for many people. However, care should be taken to choose the right lender or facilitator to get the best deal. While one lender can add up all extra costs to make the entire deal very expensive, few others can offer the same deal at much cheaper rates. It is important that a borrower always approaches the lender who not only agrees to offer the loan at a lower interest rate but also requires no additional security!