Low Doc Home Loans
If you take out a ‘low-doc’ (low documentation) loan you will not be required to give your lender or mortgage broker as many documents to prove your income, assets and liabilities.
You still have to apply in writing and sign your loan agreement, but you may not be required to produce payslips, tax returns or other proof of income as with traditional full doc loans. You will need to advise the lender what income you are on but limited supporting documentation may be required.
Since the introduction of NCCP Legislation several years ago, there is more regulation around the low doc home loan products. Many lenders offering low doc mortgages will want to see some other proof of income. This may be in the form of Business Activity Statements or Bank Account Statements over several months. Some lenders may accept certification from your Accountant.
Low-doc loans can help if you do not qualify for a standard loan. It is important to understand that Low Doc Loans generally have a greater deposit requirement and also come at the cost of a slightly higher interest rate.
Finally these loans are not designed to offer borrowers an opportunity to by-pass loan affordability test. Historically, pre NCCP, there was little emphasis on verifying income declaration by borrowers looking for a low doc mortgage.
Today, you may find that while tax returns are not essential, lenders do look for alternative/non-traditional means to confirm the borrower income before approving a loan application.