When you apply for a home loan, various documents are typically necessary during the process. While the exact requirements may change depending on the circumstances, in most cases you’re required to provide a large amount of financial paperwork, most of them concerning your employment. For instance, you’ll be asked to provide weekly payslips, tax returns and other financial statements which illustrate that your income is earned on a consistent basis.
Unfortunately, no matter how much income you make, there are some professions which leave you without these documents. But luckily, there’s at least one alternative which can allow you to apply for home loans without them. This alternative is a low document loan, which can provide a sensible method of applying for a home loan without all the documentation that is usually required. Useful for many purposes including purchases, refinancing and more, low doc loans have been an extremely helpful tool for many self-employed Australians.
Who is a good fit for a low doc loan?
If you operate your own business, work in another field where you’re usually self-employed, or are in a position where providing financial paperwork might be troublesome (for instance, if you recently arrived in Australia), then you might qualify for a low doc loan, even if you have what is typically considered a low level of income. In fact, the low doc loan is structured specifically to help small business owners and self-employed contractors, regardless of income, to apply for home loans in a manner that befits their profession. With a relatively small amount of paperwork (for instance, small business owners need to provide their Australian Business Number), you can apply for a low doc loan, bypassing most of the paperwork requirements that come along with a more traditional lending process.
But with that all said, there is still at least some documentation required even if it’s a low amount. Getting a home loan with low income is absolutely possible, but it’s best to be prepared as the process begins, which means knowing what documents you’ll need, even if you’re bypassing most of the usual requirements. And with a low doc loan, if you have just a few specific documents in order, then you may have enough already.
Traditionally, low doc loans have therefore been used by property owners, entrepreneurs and other self-employed workers who don’t retain the same employment paperwork as those working on behalf of a company. Low doc loans are perfect for this group because by owning businesses or property, they are able to easily demonstrate their income and collateral without a need for more traditional forms of proof, like payslips and other paperwork.
However, this doesn’t mean that low doc loans are entirely the domain of those without large amounts of collateral to back up their loans, even individuals with low income can apply for and successfully obtain low doc loans for property investment, so long as they know the few requirements which remain no matter what.
What do you need to apply for a low doc loan?
At Red Rock, our flexible low doc loan terms allow you to apply for a specific plan that is tailored for your own personal work and income. But there are a few constants which remain true no matter which plan you apply for. One requirement is that you are able to “self-certify” your own income, by a process sometimes also known as “income declaration” or “low doc declaration”. To verify this self-certification, you need to provide some further documents, including a letter from your accountant, a business bank statement, or a business activity statement (BAS).
With even just one of those documents, you can qualify for certain low doc loans, for instance the Low Doc Express or the Low Doc Easy, which are offered via Red Rock. With two or all three of the documents, you become eligible for other loans with different terms illustrating that no matter your income, and no matter what paperwork you’re able to provide, there is likely some form of home loan that will be right for your circumstances. Better yet, low doc loans come with a number of benefits: No credit scoring, no mortgage insurance, and extremely flexible cash-out options, to name just three. Low doc loans are not just helpful at the start, but provide favorable terms for the duration of the agreement.
What else can I do that might contribute towards obtaining a low doc loan?
Low doc loans are typically assessed with an eye towards the strength and consistency of the application. As a result, your tenure (both in your work generally, and on your ABN), your credit history, your self-certified income and the other supporting documents will be considered during the application process, so it’s best to apply following a short period where you were generating constant income. And of course there are other factors that will be considered during your application, such as the location of the property you’re intending to purchase.
But no matter what your finances, paperwork, or intended purchase might look like, there may still be a low doc loan that’s right for you. For instance, those who work a part-time job while also running their own business may remain eligible for a low-doc loan, despite their partial employment, so long as the business they operate meets the policy standards. For another example, even if you don’t have an accountant, or an up-to-date BAS, you can also still be eligible for a low doc loan as long as your bank statements support your self-certified income. And even if your ABN is less than six months old, as long as you’re able to demonstrate that you’ve been self-employed for a significantly longer period of time, then the specialists at Red Rock may still be able to accommodate your application for a low doc loan.
There is a wide range of low doc loans and other specialist lending products available for Australians with complex finances or low income. Contact Red Rock Mortgages today, and speak with a specialist lending manager about the low doc loan options that are best for you.