Seizing Your Best Low Doc Home Loans | ScaleMortgage

Low doc home loans? It’s a popular choice not just for the self employed. If you’re someone who struggles to show traditional income proof like payslips or tax returns, this could be your ticket to homeownership.

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Freelancers, contractors, business owners with irregular income, or even retirees without a steady pay check – low doc loans are designed to open doors for you.

Let’s dive into how these loans widen the path to buying a home, beyond the conventional borrower.

What are Low Doc Home Loans?

A low doc home loan, also known as a low documentation loan, is a type of home loan designed for self employed borrowers who may not have the traditional documentation required for a standard home loan application. This can include tax returns, financial statements, and other proof of income.

Low doc mortgage loans typically require less documentation and have more flexible lending criteria compared to traditional home loans. This makes them an ideal option for self employed individuals, sole traders, and business owners who may have fluctuating income or difficulty providing traditional documentation.

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How Does a Low Doc Mortgage Work?

Low doc mortgage loans work similarly to traditional home loans, with a few key differences. The main difference is the documentation required for the application process. Instead of providing tax returns and financial statements, self-employed borrowers can provide alternative documentation, such as bank statements or business activity statements (BAS).

Lenders will also typically require a larger deposit for low doc mortgage loans, as they are considered higher risk. This can range from 20% to 40% of the property’s value, depending on the lender and the borrower’s financial situation.

Why Choose a Low Documentation Mortgage?

There are several reasons why a low doc mortgage loan may be the right choice for self-employed borrowers. These include:

  • Minimal Documentation: Low doc mortgage loans require minimal paperwork, making them ideal for self-employed individuals without standard income verification. These loans are easier for self-employed people to get than regular mortgages because they have more flexible rules.
  • Competitive Interest Rates: Low doc mortgage loans have competitive interest rates, despite being riskier. This makes them a cost-effective option for self-employed homeowners.
  • Invest in multiple properties: Interest only mortgages can be a useful tool for property investors looking to expand their portfolio. The lower monthly repayments can free up cash flow, allowing investors to purchase more properties.
  • Investment Property: Low doc mortgages can help self-employed people buy investment properties and expand their property collection.

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What Documentation is Required for a Low Doc Loan?

Low doc mortgage loans need less paperwork than regular home loans, but lenders still need some documents from borrowers. These may include:

  • Bank Statements: Lenders may require bank statements to verify income and expenses.
  • Business Activity Statements (BAS): BAS statements display a business’s income and expenses.
  • Notices of Assessment: Letters from the ATO can confirm how much money you made.
  • Financial Statements: Some lenders might ask for financial statements like profit and loss statements to check the borrower’s finances.

Understanding that the necessary paperwork may differ among lenders is crucial. Consulting with a specialist like ScaleMortgage can simplify the procedure.

How to Apply for a Low Doc Mortgage Loan with ScaleMortgage

At ScaleMortgage, we know self-employed borrowers face challenges getting a home loan. That’s why we offer a range of low doc mortgage loan solutions to help you achieve your homeownership goals.

Our process is simple and straightforward:

  • Initial Consultation: We will schedule an initial meeting to discuss your financial situation. During this meeting, we will help you find the best low documentation mortgage loan.
  • Documentation Review: We will check the documents you have and let you know if you need any more for your application.
  • Lender Selection: We’ll help you choose the best lender for your low doc mortgage, considering your finances and loan needs.
  • Application Submission: We will submit your application to the chosen lender and manage the process on your behalf.
  • Approval and Settlement: After approval, we will help you finalize details and arrange settlement for your application.

Tips for Applying for a Low Doc Mortgage Loan

Applying for a low doc mortgage loan can be a straightforward process if you have the right documentation and support. Here are some tips to help you prepare for your application:

  • Organise Your Documentation: Before applying for a low doc mortgage, ensure you have all required documents ready. These include bank statements, BAS statements, and assessment notices. Having these documents ready will help make the application process go smoothly.
  • Maintain Good Credit History: Lenders will still consider your credit history when assessing your low doc mortgage loan application. Make sure you have a good credit score and address any issues before applying.
  • Be Prepared to Provide Additional Information: Lenders may request additional information or documentation during the application process. Be prepared to provide this to ensure a smooth and timely approval.
  • Work with a Mortgage Broker: Working with a broker such as ScaleMortgage can help simplify the process and find the right option for you.

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What is the difference between Lo Doc and Alt Doc?

Lo Doc (Low Documentation) loans require minimal paperwork to prove income, aimed at those with non-traditional income streams. Alt Doc (Alternative Documentation) loans, a subset of low doc, often require slightly more detailed proof, like bank statements or business activity statements, but less than traditional loans.

Are low deposit home loans worth it?

Low deposit home loans can be worth it for buyers who want to enter the housing market sooner without waiting to save a large deposit. However, they may come with higher interest rates or require mortgage insurance, making it important to weigh the costs against the benefit of early homeownership.

Are there any no doc loans available?

No doc (No Documentation) loans, which require no income verification, have become rare and are typically not available due to stricter lending standards. However, some lenders may offer similar products under more regulated conditions for specific borrowers.

What does Lo Doc mean?

Lo Doc stands for Low Documentation. It refers to loans that require less income verification than traditional loans, designed for individuals who may not have regular income proof but can still demonstrate their ability to repay the loan, such as self-employed or freelance workers.

What is alt doc loan?

An alt doc (Alternative Documentation) loan is designed for borrowers who can’t provide standard income proof but can offer alternative documents, like bank statements or business activity statements, to verify their income. It’s a type of low doc loan with slightly different documentation requirements.

Are low doc loans bad?

Low doc loans are not inherently bad; they offer a solution for individuals who cannot qualify for traditional loans due to their employment type or income verification issues. However, they may carry higher interest rates or fees, underscoring the importance of understanding the terms and considering if the loan suits one’s financial situation.

Finding the Best Low Doc Loans

If you are a self-employed borrower looking to purchase a home or investment property, a low doc mortgage loan may be the right solution for you. With minimal documentation, flexible lending criteria, and competitive interest rates, low doc mortgage loans can help you achieve your homeownership goals.

At ScaleMortgage, we specialise in low doc home loans, contact us today to learn more about how we can help you.

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Thomas Makin

Thomas Makin is the Principal Mortgage Broker and Co-Founder of Scale Mortgage. He has a Diploma in Finance and Mortgage Broking Management and is accredited by the Mortgage & Finance Association of Australia (MFAA).

Thomas is known for his skill in providing tailored mortgage solutions. He helps homebuyers and investors across Australia, showing a strong commitment to professionalism and high industry standards.

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