Low doc home loans at a glance


If you’re wondering if a low doc home loan is right for your property goals, here are some of the basic characteristics that can often be checked at a glance. This should help you quickly assess whether or not these mortgage types are right for you.  

Less paperwork than normal home loans

If you’re a self-employed individual hoping to secure property in the coming months, a low doc home loan could be right for you. This is because you may not have the classic documents needed for the traditional home loan application process.

You need to provide proof of your income alongside your Australian Business Number in order to prove you’re operating a business and have the means to sustain both yourself and your repayments to the lender.

Generally higher interest rates

Because of the heightened risk of low doc home loans, it’s important to remember that if you get an approval, you could be subject to a slightly higher rate of interest than if you applied for a normal home loan.

Again, this is intended to mitigate any risks being taken on by the lender for your low doc home loan. You may also be required to take out lenders mortgage insurance (LMI) to protect their interests. LMI is charged on home loans for more than 80 per cent of the property’s overall value. This is an extra, one-off cost charged on top of your mortgage that aims to provide your lender with security for such a large amount of money.

Less flexibility than normal home loans

You may find that there are less facilities and add-ons available for low doc home loans. However, if you find yourself acquiring some of the paperwork necessary, you could approach your lender about reducing your interest rate or refinancing your loan to another type of mortgage.