No Doc Home Loans
The self employed , contractors and others who find themselves in an occupation where it is hard to prove to a bank, or other potential lender, of their regular income earning capacity, have now got a friend in a no doc, or low documentation, home loan.
A low doc home loan demands very little, sometimes even no income documentation to gain approval. It is very valuable to people who don’t have any tax return to glean figures from or when a financial report is not obtainable.
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Benefits of a no doc home loan:
- No doc home loans are useful because of the fact that many self employed contractors occasion considerable delays in preparing their tax returns.
- A no doc home loan will require you producing a declaration that reveals your annual income instead of providing your tax return.
- In many cases the interest rate on a no doc home loan will be comparable to a standard variable interest rate home loan.
- You may also be able to borrow up to 80 per cent of the property value with a no doc home loan.
To obtain a no doc home loan you will still have to convince your lender of your ability to repay, even though the normal income requirements have been relaxed. This is usually obtained through a self certification process proving you are in the position to service the loan.
Loan Value Ratio as it applies to a no doc loan.
The Loan Value Ratio (LVR) for a no doc home loan is usually struck at an 80 per cent maximum although lenders specializing in such loans have been known to lend up to 95 per cent to some borrowers. This would probably be rare these days however, especially when taking into account we are still in the aftermath of the Global Financial Crisis (GFC). With some experts forecasting that the end of recessional pressures has not yet ended. The higher the LVR the higher the interest charged, a reflection of the amount of risk the lender perceives he is carrying.
Although no doc home loans may be more expensive than other home loans especially when insurance costs are taken into account there remains considerable advantages such as:
- You only need to complete a simple income declaration form.
- No tax returns are normally required.
- Little in the way of financial reports require producing.
The disadvantage however is:
- The interest rate is higher although lenders will sometimes lower the interest rate after a period of regular repayments.
- Normal interest rates are sometimes offered by lenders when the borrower takes out a lenders mortgage insurance (LMI).
Qualifying for a home loan was once a daunting task for the self employed but with the advent of no doc home loans many such home buyers are now enjoying the purchase of their own home.
Self employed home buyers who have been in self employment for two years or more and have taxation records to back up their income claims can still get a normal home loan but those who have been self employed for anything less than two years and with little or no supporting taxation evidence will benefit most from a no doc home loan.
Many lenders will offer a no doc home loan to contractors with no proof of income as long as the borrower is willing to certify his or her financial situation and well as have an ABN ( Australian Business Number) and be registered for GST (Goods and Services Tax). In many cases the interest rate will be the same as a normal home loan.
If you wish to learn more about no doc home loans please contact us here and we will be pleased to advise you further.
Related posts:
- Low doc High Cost: Be Careful of Low-doc Home Loans
- Home Loans for the Self Employed
- What Are Low-doc Loans
- Low Doc Loans in the Recession
- Is Home Ownership Possible with a Low Doc Home Loan?
- Home Loans for the Self Employed – Full Doc & Low Doc Home Loan Requirements
- No Income Verification Home Loans
- eChoice Lo Doc Home Loans
- St.George Home Loans for Self-Employed and Small Business Owners
- Beat Home Loans Low Doc Loan
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