How much money you put down as a deposit will play a major role in your home loan. Regardless of what type of mortgage you’re trying to obtain, most lenders will require a deposit of at least 20 per cent. If you were to default on your mortgage, the lender may be forced to sell the property you buy in order to repay their loan.
However, there’s no guarantee that this will fully repay the loan, and the process can be time-consuming and costly in and of itself.
Since low doc home loans are typically viewed as a higher risk, most borrowers can count on needing a loan-to-value ratio (LVR) of at least 80 per cent.
With that said, there are options available to low doc home loan borrowers seeking a deposit of less than 20 per cent.
For example, the Low Doc Easy loan features a maximum LVR of 85 per cent. This loan requires a self-certification and either six months worth of business bank statements, six months of business activity statements or an accountant’s letter.
At the same time, you also need an Australian business number (ABN) that has been in use for a minimum of two years.
Another option is the Low Doc Plus loan, which also features a maximum LVR of 85 per cent. This mortgage requires self-certification and three months worth of business bank statements, as well as one month of personal bank statements.
Fortunately for the recently self-employed, the ABN need only have been in use for six months.
While both of these loans do not carry requirements for mortgage insurance, borrowers should keep in mind that in most cases, a deposit of less than 20 per cent typically results in the lender requiring them to obtain lenders mortgage insurance.