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The term “Low Doc” home loan can mean different things depending on the lender you are dealing with. The term was commonly used before the 2008 Global Financial Crisis (GFC) to refer to a mortgage that required less information than a ‘standard’ home loan to prove the applicant’s ability to repay the loan.

What are low-documentation loans and loans with no conditions?

Are you self-employed or have a mixed credit history?

Not everyone is a typical wage or salaried (pay as you go (PAYG)) worker. If you are self-employed or your circumstances are unusual, there may be options available to help you get your first home. When you apply for your first home loan, lenders want to see proof of your income – for many people, this means providing payslips and other financial statements. But what if you are self-employed and don’t have regular documents to prove your income? The good news is that if you run your own business, it’s still possible to buy a home with a low-documentation loan. Also, if your credit history is insufficient, you can apply for a loan with no conditions instead.

Low doc loan?

Low doc loans are specifically designed for the self-employed, who often cannot provide traditional proof of income, such as regular payslips. The term “low doc” does not mean that you have to provide less proof of your income – rather, it refers to different types of proof of your income. Not all lenders offer low doc loans. Those that do may require a higher deposit or a higher interest rate. You can apply with us to explore your options and compare rates.

Loans for self-employed persons / sole traders

If you are self-employed or a sole trader, it is important to keep all your financial documents up to date. In this case, applying for a home loan is no different from applying for any other home loan. Lenders usually need to see your most recent one to two years of personal and company tax returns and income tax statements. This is because your declared taxable income is likely to be used to determine how much you can borrow, rather than your gross turnover.  If you’re not sure what you need, we have more information on what documents a self-employed person needs to apply for a home loan.

Self-certification

A Low Doc loan can help you get your own home even if you don’t have up-to-date documents. Some lenders may be satisfied if you self-certify your income. This means that you have to sign a certificate (and possibly get approval from your accountant) stating that your income is enough to cover your home loan payments. Usually, however, you may have to provide some additional documents. Different lenders have different requirements, but you may be asked to provide: – an Australian Business Number (ABN) – proof that you have been self-employed in the same industry for at least 12 months – the most recent Business Activity Statements (BAS) certified by the Australian Taxation Office – several months of bank statements.

Non-conforming home loans

Ineligible home loans are for home buyers with some or no gaps in their credit records. This type of loan is for people who have previously defaulted on payments, have just arrived in Australia or have not previously applied for credit. These loans often have a higher interest rate than conventional home loans. However, once you have established a solid repayment history, you may be able to negotiate a lower rate with the same lender or refinance with a new lender at a later date.

If you don’t fit the picture of the “typical” first home buyer, you don’t have to give up your dreams of buying your own home. We can recommend a variety of strategies to help you get started on the property ladder.