Oak Laurel | Low Doc Home Loans
Get a home loans without having all the documents required to prove your income.
Low Doc Home Loans: mortgages for self employed people
What you need to know about low doc home loans.
Low Doc home loans are usually considered as higher risk by banks and lenders. This is because you are providing less evidence of your income. Because low doc borrowers are considered as higher risk banks usually require lower maximum Loan to Valuation Ratios (LVRs), higher interest rates (proportional to the assessed risk), and less loan features than regular (full doc) home loans.
To get a full doc loan (full documentation loan), a self-employed borrower usually needs to provide evidence of their income using a combination of:
- Tax returns
- ABN and/or GST registration
- Business Activity Statements (BAS)
- Business banks account transaction statements
- Accountant’s letter
Contact us about a low doc home loan
An Oak Laurel mortgage broker will go through your situation with you to ascertain the best way forward.
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The main documents that can be used to verify your income are:
- 12 months’ BAS statements showing a high turnover.
- An accountant’s letter verifying your income.
- Business bank statements showing a high turnover.
- Old tax returns (over 24 months).
- Interim financial statements.
Low doc loans can also be used by:
Self employed people who have trouble separating their personal and business cash flows
Professional investors: This is where investing is considered as the business.
Self Employed people with a lower income in the last financial year: Many banks and lenders use the lower or average of the last two years income when assessing your loan application. This can impact on your borrowing capacity if the lower income level is a once off.
Self employed people with complicated tax or company structure arrangements: Especially if you are a high net worth individual your accountant may set up complex arrangements to protect your assets or limit your tax liabilities into the future. These types of arrangements may mean that it is difficult for staff assessing your application at the bank to understand what it means. This can cause delays or a rejection of your application.
People who have large deductions such as depreciation which are not a real expense. These types of deductions can make you tax return look like you are earning a lower income than you really are. In some cases some lenders will allow you to ‘add back’ these expenses into your income for the loan assessment purposes.
Trust structure that have distributed income to family members. This can make it look like you have less income than you really do.
Some cash based businesses have difficulty showing income to the satisfaction of the lender.
Oak Laurel Mortgage Brokers – Low doc home loans made easy!