What You Should Know About Low Doc Home Loans

A low doc home loan can be an excellent solution for those who cannot qualify for a standard home loan. Unfortunately, the main trouble is that you don’t have a ‘traditional’ job. For instance, you’re self-employed; it doesn’t come with traditional payslips, or you run a small business. These can bring in a good monthly income but, of course, the necessary paperwork can be a little trickier. That means traditional lenders might reject your application. Fortunately, low documentation home loans can offer you a way to purchase your home. So, what should you know about these loans?

Interest Rates Will Vary

A low doc loan can be a great solution to consider, unfortunately, the interest rates can vary. Fortunately, most lenders will fix the rate throughout the duration of the loan. That does give you a huge advantage as it means you know exactly what your interest is. Of course, it is important to understand that lenders set the rates according to their loans. It can, however, work in your favour if you have a good credit history and are putting down a lot of money too.

You Need to Have a Large Deposit

One of the more frustrating factors about a low doc loan is that most lenders have a limit on how much they’ll let you borrow. For instance, some lenders will set a limit of 80% of the home’s value. It means you need a bigger deposit of 20%. Compare this to traditional home loans and you could put as little as 5% down. Unfortunately, a low doc loan is not going to allow that – unless you find a very special lender.

Typically, you’re going to need to put down a large deposit to secure the home and loan. That isn’t such a bad thing, however. The more money you put down on the home, the less you have to borrow. It’s ideal and may even help keep the loan’s interest rates pretty reasonable too. So, if you want a low doc home loan, try to save for a bigger deposit. It could help.

You Still Need to Provide Documentation to the Lender

While you have less documentation to provide to the lender, they’ll still want to see certain things. For instance, most lenders will want to look at your business activity statements for the last year, along with current tax returns, loss and profit statements, and more. You might also be required to sign an income declaration form. A low doc loan can be pretty straightforward, however.

A Low Doc Home Loan Can Benefit Most Self-Employed Individuals

Low documentation loans might be fairly new compared to other finance solutions, but they are an incredibly viable option to consider. While the interest rates are typically set higher, they are fixed and can be more affordable depending on your circumstances. Of course, you will likely need a larger deposit but again, this works to your advantage. Best of all, you require less paperwork to support your loan application. A low doc home loan can be a great choice when you’re starting up a small business or are self-employed and looking to get on the property ladder. Read more in this site: www.lowdocloansco.com.au.