Self-employed business owners are typically ambitious and driven by their passion, goals and lifestyle necessities. They work without the burden of employers and are the sole boss of their ventures, but with such flexibility can come challenges, the challenge to being self-employed and to acquire a home loan with limited documents.
Here, the discussion is about low doc loans that are designed for the people who have the sufficient income to apply for a home loan but don’t possess the standard documents to prove their serviceability. In Australia, low doc loans are available from some banks and non-bank lenders. It’s just a matter of the documents and other simple terms that need to be fulfilled by borrowers.
There is a saying that success in business comes with getting the details right. Self-employed people better understand the importance of getting things right thus they typically want in-depth details when it comes to selecting the right home loan and the associated lender.
Difficulties self-employed people face to acquire a low doc home loan
Most banks require extensive proof of income to grant any credit to borrowers. By doing this, they want to become aware of the facts that borrowers have the ability to repay the loan amount within a given time. For a normal loan, people need to show at least one or two years personal and business tax returns and associated papers. Avoiding these and it may lead borrowers towards disapproval.
Generally, lenders require a few statements such as:
- A borrower’s genuine income declaration statements
- Legally registered business name – Australian Business Number (ABN)
- Business Activity Statements (BAS) for 6-12 months
- Personal & business bank statements
- Accountant’s Declaration
Conjointly, lenders also place a few eligibility conditions for low doc loans. There is not any standard list of clauses that goes for all lenders but, the accumulated ones are the common conditions that are being generally asked by many lenders when borrowers request a low doc loan.
A few eligibility conditions consist of-
- The proof which describes that you have been working in the same industry for ideally at least two years.
- 6-12 months of consecutive BAS statements that are verified by the Australian Tax Office (ATO) and/or demonstrated by an accountant’s declaration.
- 6 months current/recent personal & business bank statements.
Features Borrowers Should Look For In a Low Doc Home Loan-
Above-mentioned facts are describing the documentation and eligibility criteria for a low doc loan. But here, borrowers can discover what they need to focus while taking the home loan.
- Additional Repayments in terms of a lump sum or regular extra payments.
- Splitting the loan between fixed & variable interest rate.
- Flexible repayment options with weekly or monthly facility.
Every lender maintains separate low doc loan criteria thus it is suggested to talk with an expert mortgage broker who first discusses your needs and offers a suitable loan plan. If you choose a reliable market lender, he or she will help you not only in accumulating the required documents but also suggest easier ways to present our application. Therefore, if you are self-employed and hunting for a home loan, seeking a trusted mortgage broker will be of great use for you.
The author is a professional loan consultant in Low Doc Loans. He is dedicated and indulged in offering leading low doc loans options to borrowers. Along with the experience of loan consulting, he also possesses writing skills that encourage him to draft informational write-ups based on loan and trending facts.