Low doc loans and BAS

Low doc home loans can be an invaluable tool for self employed borrowers, but low documentation isn’t the same as no documentation.

Borrowers will still be asked to provide some proof of income and assets, and oftentimes this involves a BAS.

What is a BAS?

A business activity statement, or BAS, is a special form given to the Australian Taxation Office (ATO) in order to report tax responsibilities.

This statement was introduced by the ATO as a way for businesses to report their goods and services tax and pay as you go withholding tax.

Now many lenders require 12 months worth of BAS in order to provide low doc home loans. The statements show lenders client turnover for self employed individuals, shedding some light into the risk of making finance available to that person.

Obtaining a BAS

Handwritten business activity statements are not accepted, making it necessary for borrowers to obtain them either from the ATO or their bookkeeper.

Once a BAS has been obtained, borrowers should make sure they are accurate and free of errors. Additionally, if there are any major fluctuations between quarters, borrowers should prepare to explain why this is to put lenders at ease.

BAS not always necessary

While these statements are a popular form of income verification for low doc home loans, they are not the only option.
Some lenders will accept an accountant’s letter or bank statements in place of BAS. For some self-employed borrowers, using documents besides BAS can be a smart move, as they may do a better job of showing minimal risk.

If you’re considering a low doc home loan or want to discuss your options with a professional, contact the specialists at Redrock.