Low-doc loans FAQ: All your questions answered
Low-doc loans are an under-used product that can benefit business owners who may not be approved for traditional finance. Here we answer all your questions about low-doc loans and how you can apply.
What is the difference between a regular loan and a low-doc loan?
Low-doc loans are a unique lending product designed for those who do not have access to the paperwork required for a regular home or business loan. Lenders have a responsibility to ensure that borrowers can repay any loan that they approve, so they are still required to prove that a loan is “not unsuitable” for the borrower and their circumstances. However, low-doc loans require less paperwork for approval than a regular home or business loan.
Are business owners eligible to apply?
Yes! In fact, low-doc loans were specifically designed for self-employed borrowers who may find it difficult to provide conventional proof of income. In compliance with the NCCT Act, lenders are only able to provide low-doc loans to self-employed people. Applicants who can provide proof of income are not eligible for this type of loan.
Do low-doc loans have higher interest rates?
Generally yes, but not necessarily. Low-doc loan interest rates depend on the lender, as well as a few factors such as your credit history and the loan-to-value-ratio (LVR). Lendfin works with multiple lenders to ensure that we can provide the best choice of loan products for our customers, so contact us to find the best low-doc loan available to you.
Can I buy a house with a low-doc loan?
Yes, low-doc loans are often used to obtain a mortgage. However, some lenders only offer low-doc options for business products. Speak with a specialist before starting your application to ensure your choice of loan is right for your business and personal situation and to maximise your chance of loan approval.
How much can I borrow?
This depends on a number of factors including the lender, your income, your credit history and the security being offered. With a residential property you can generally borrow up to 80% of the security value, and 70% for commercial properties. Cash security and other assets may also be accepted.
I have a bad credit rating. Am I still eligible?
Although documents may not be required, credit rating is still an important factor in low-doc loan approval. If you have a bad credit rating it may not be the right product for you, however our Lendfin specialists may still be able to help with other more suitable finance options.
Who offers low-doc loans?
The Big 4 Banks each offer a variation of low-doc loan products, as do a number of smaller independent lenders. Although your loan application may be declined at one lender, we can help you to find a lender with a product more suitable to your needs.
If you think a low-doc loan could be suitable for you or your business, contact Lendfin and we’ll work with you to obtain the lending solution that’s right for you.