If you think that property loans are only given to people who are employed, the time has come you should think again! If you are self-employed but not able to showcase your income via conventional means, then you can consider low doc property lending. This can be your solution to buying a house or land. The concept of low doc property lending first appeared in the real estate landscape of Australia back in the 1990s. Non-bankers or mortgage bankers initially established the concept for creating a niche market which is differentiated from traditional borrowing.
Tax return submission or any other financial statements are not necessary for availing such loans. Low doc property lending is a simple loan given on the basis that the applicant makes a simple declaration about the earning they make via their business.
They are not No doc property lending:
It is extremely important for the potential applicant to understand that they are low doc loans and not a “no doc” one. Hence, the document required to get such kind of lending are much lesser than usual traditional loans. Low doc property loans have been designed keeping self-employed applicants in mind. Even if you cannot provide tax returns of the business for the previous two years as a basic proof of income still some alternate documents like the following can help you out. Following are the basic document requirement for low doc property lending.
- The borrower must possess a clean credit history.
- Maximum amount of lending can be around 80% of the value of the property.
- Property valuation done.
- One who does not have any other mortgages over a property.
- Must be a self-employed individual for a minimum of one-year time.
What are the features of low doc property lending?
With loc doc property lending, you get almost all the features that a standard home loan offer. Some of the common features are listed below.
- Interest-only option.
- Extra repayment facility.
- Fixed rates of interest.
- Option for split-loans.
- Line of credit.
- 100% offset account.
What is not available for low doc property loans are as follows.
Understanding this list is equally important for the potential applicant:
- Introductory rates of interest.
- Guarantees from third parties.
- Repayment holidays.
- Security substitutes.
How to get approval for low doc property lending?
Here is how you get approval for low doc property lending:
- Find out what documents you need to provide to the lender, what your exact lending needs are and the list of qualified lenders you can approach.
- Select the lender who has the lowest interest rates and fees and offers the basic loan features.
- Remember to provide only the documents asked for and nothing extra. The application for the low doc property lending must be made in such a way that it favors the lender.
Can you move to a standard home loan?
Many lenders will allow the borrower to move from low doc property lending mode to a standard home loan after a specific period. However, this is allowed when all repayments and tax returns due are paid off by the borrower. You can choose a lender who is flexible in such shifts.
Low doc property lending today can make your dreams of owning a house come true without having to show extensive income proof documentation. Select your lender with caution and you should be ready to start looking for that ideal house shortly.