Are Lo Doc Loans for you?

Fitch Ratings stated recently that lo doc loans make up roughly eight to ten percent of every mortgage in the country’s “securitised mortgage market”.
This was reported in the AUSTRALIAN Publication three months ago.
The news item further stated that a Fitch analyst said that the ratio of these low document loans was similar in the broader $1.2 trillion Australian mortgage market.
The group said these loans were experiencing “considerable deterioration” no solution can be seen for loan delinquencies.
Now, ask yourself are the loans suitable for you and your requirements?
As a refresher, Lo Doc loans are intended for individuals who expect to acquire real estate but are not qualified to avail of regular property mortgage. You will not be mandated to submit documents which include proof of income as well as assets and liabilities. It employs the simple process of self-verification. It is simply having to declare your income without the certified documentation.
Are you interested to apply for this particular loan?
Then, you need to study its merits and benefits. You also have to consider the downsides.
These low document loans are meant for citizens who own equity or savings deposits and are able to show any proof of regular earnings. These may be casual employees, self-employed entrepreneurs or consumers with negative credit ratings.
If this is your only alternative, it is important to determine if you can afford the repayment rates. Lenders normally charge exceptionally high interest rates in the absence of the normal requirements for regular loans. Another condition for low doc loans is mortgage insurance which bloats the costs further. The rule is that this type of mortgage covers until 80% of the property value.
Yes, the Lo Doc loans have high interest rates. However, this may be reduced if you are able to submit more financial confirmation. You cannot go around the mortgage insurance and higher deposit is demanded. Almost 20% of the property value should be given by the buyer. In fact, you may even be asked for additional security such as your car or other investments. But, it you are interested, call us at 03 8677 9733 for further inquiries on this matter.

Discover the Benefits of Lo Doc Loans

Lo Doc Loans have been conceived for small business proprietors and self-employed individuals in Australia.

Listen to this: These self employed persons may be eligible for real estate mortgages but are not capable of providing documents such as tax returns’ income verification. These Loans can be variable or fixed rate low doc loans that ensure the lowest home loan rate.

You need to understand the concept of the Lo Doc Loans or Low Documentation Home Loan which may be approved without standard income verification requirements. In other words, you sign an income declaration and your bank will accept this as proof of your income. It does not have to check your tax returns and other financial statements.

Self Employed people realize and may have experienced the fact that banks perceive them as higher risks. These financial institutions are more stringent with regards to the evaluation of loan applications.

Banks normally require the last two years of tax returns as well as personal and business assessments; financial statements during the last two years; and, Business Activity Statements or interim accounts. The red tape is simply overwhelming.

With the Lo Doc Loans, all you have to do is to declare your income by filling up a simple one-page form. The tax returns of self employed people do not reflect their real revenues.

When these loans were first introduced, a letter from the borrower’s accountant to corroborate their income was required. The contemporary Low Docs have become more flexible!

As a rule, self employed borrowers are obligated to present a valid Australian Business Number that has been used for the past two years and registered for the Goods and Services Tax. Nonetheless, certain lending facilities do not require Australian Business Numbers or are contented with ABNs that have just been registered.

This particular loan helps borrowers who are bothered by erratic cash flow or who may not possess any current financial statements. However, they can own adequate equity in existing real estate properties. The Lo Doc Loans can be flexible or fixed rate mortgages or lines of credit and contain a counterbalance provision.