Normally, whenever you wish to seek a property loan/finance, you need to submit a certain set of documents like your income proof along with tax returns papers. But, there is a major section who doesn’t have enough documents, and in case of monetary requirement, they have to go an extra mile. But with the surge of low doc property finance, availing loan becomes easier. This type of loan facility is carried out by using an alternative method of income proof rather than the traditional method of showing income proof and tax return statements.
People have so many questions about Low Doc Property Finance; let’s look for answers to most frequently asked questions in this aspect.
Is this type of finance facility only for self-employed people?
Yes, low doc property finance options are only for self-employed borrowers. Normally, banks hesitate to lend property loans to self-employed people as they are not sure of their income stability. So, they are quite conservative while assessing finance applications for self-employed people. They ask for so many documents such as tax returns for the last two years, financial statements for the last two years and many other documents; this becomes complicated for a self-employed person.
On the other hand, the low doc finance procedure is very simple. You just need to state your income on a form and provide a simple proof of income such as a business account statement or a declaration from an accountant verifying your annual income. No other document is required, and you are good to go.
What are the other situations when low doc finance option is a good choice?
Besides, the inability to provide detailed proof of income, there are many other instances when low doc finance option is opted out.
- If you don’t have the latest tax returns
- If your income has increased and you haven’t filed recent tax return
- If the structure of your work is complex and complicated
- If you have segregated your income into many family members
- If you receive most of the income in the form of cash
Are low doc loans ‘No Doc Loans’?
It is important to realize that Low Doc Property Finance is a No Doc Loan. It is just like another property loan, the only difference is that it requires fewer income documentation. Requires documents such as:
- Borrower’s clean credit history
- Only 80% of the property’s value allowed for borrowing
- Complete evaluations of property required
- You can’t borrow for the second time on the same property if the first loan is still present
- The borrower must self-employed for at least 1 or 2 years.
What basic documents are required for Low Doc Property Finance?
While applying for a low doc property loan, you might required to present some of the following documents such as:
- An income declaration signed by a borrower that states his annual income
- A document that states your registered firm name
- Borrower’s Australian Business Number (ABN)
- Borrower need to present his Business Activity Statements (BAS) for the last 12 months
- You also have to show a document stating that you registered for GST for at least the last 12 months.
How can I apply for low doc finance loan?
Many companies out there provide specialized brokers to help you find the right kind of lender as per your requirement. Do some internet search and get in touch with some good broker. Else get some referral to reach out to the good broker.
We hope that with all these set of questions and answers, we have answered your queries. Make sure that you do a thorough study of the various low doc property finance and choose the best one.