The Low Down on Low Doc Home Loans. Update on Low Doc Home Loan Lending and How to Apply

The reality is that low-doc home loans are still available, albeit with tighter restrictions than applied previously.

It is worth taking a quick look at how low doc home loan lending in Australia has been affected by recent economic turbulance.

Firstly, it should be understood that In comparison to some other countries, Australian lending rules are relatively strict and have not led to anywhere near the type of lending problems experienced elsewhere.

As a result, it is still possible to obtain low doc home loans, although lending requirements - especially the loan amount as a percentage of the value of the security property (LVR, or Loan Value Ratio) - have been tightened.

What Exactly is a Low Doc Home Loan?

Low doc home loans are primarily intended for self employed people who have difficulty in providing formal income verification.

Low doc home loan applicants will normally have cash, savings or equity in an existing property and have sufficient income to meet loan repayments.

A simplified application process involves less paperwork and will normally require a borrower to self-certify their income and ability to meet future loan repayments.

So if you are self-employed, a contractor or have irregular income patterns, a low doc home loan may be right for you.

Current Low Doc Home Loan Lending

There are still many lenders offering low doc home loans. Conditions vary between lenders and an experienced mortgage broker will know which lender has the most appropriate conditions to meet a particular borrower's individual circumstances.

Whereas it was previously possible to obtain a low doc home loan with an LVR of 90%, it is now generally not possible to obtain a low-doc home loan where the amount of the home loan will exceed 85% of the value of the security property.

Some major home loan lenders now also require BAS statements where the LVR is between than 60% and 80% and most major lenders require the applicant to have been trading for at least two years, although specific requirements vary between lenders.

Interest rates for low doc home loans can still be competitive with rates available for standard home loans.

Applying for a Low Doc Home Loan

Applications for low doc home loans can often be rejected because a mortgage broker does not fully understand the Lender's low doc home loan policies and may not perform the appropriate checks before lodging a formal loan application.

A series of unsuccessful home loan applications can may make it progressively more difficult to obtain a low doc loan through another lender so it is therefore very important to select the right mortgage broker before submitting a formal application.

A competent mortgage broker will be sufficiently up to date with low doc loan lending policies and will take the time to understand your circumstances to ensure that your application is placed with the most appropriate lender. A broker should also be able to take you through all the available options and generally make you feel comfortable with the process.

Call or visit MortgageBroker Direct online today to quickly see if you qualify