Are low doc loans only for the self employed?

[mcdeyess]

Hey all,

Perhaps the mortgage brokers among us can confirm this one. My colleague is a public servant and CBA have told him that he can't get a low doc loan as he is an employee instead of being self-employed. Is this a common policy I know they are created generally for this purpose but thought anyone could use one? Is it just a CBA specific policy perhaps?

Cheers,
[email protected]

 

[Rolf Schaefer]

There are lenders that do PAYG LowDoc loans, some cap at 70% LVR others allow up to 80% LVR.

 

[Rixter]

Whats the usual cap on a No Doc loan , Rolf?

Is LMI compulsory for No Docs ?

 

[Kristine..]

Hey all,

Perhaps the mortgage brokers among us can confirm this one. My colleague is a public servant and CBA have told him that he can't get a low doc loan as he is an employee instead of being self-employed. Is this a common policy I know they are created generally for this purpose but thought anyone could use one? Is it just a CBA specific policy perhaps?

Cheers,
[email protected]

G'Day mcdeyess

Low Doc loans are the way of the future - the percentage of the population not in standard PAYG employment is increasing. Many IT workers are on contracts, many people work more than one part time job, many people can't see to get past 'casual' and certainly cannot expect a 38 hour per week superannuated position.

Most lenders still require some sort of 'proof' of status of self-employment - usually an ABN more than two years old, as the distinction is generally split between 'employed' and 'self-employed'.

I know of only one lender which will accept the borrower's statement that they have been self-employed for two years or more - without an ABN - and that they can afford the loan without financial hardship.

However, having said that, there are a few non-conforming lenders which will do PAYG Low Doc – requiring a declaration of financial position (assets, liabilities, income, expense) and a letter of employment. This would enable your friend to apply for an 80% loan, however although the loan amount is not capped, this lender will not accept PAYG income self certified above $60,000 per annum, so that effectively caps borrowing power depending on the overall financial position.

The important point here, of course, is as your friend is employed, why is he/she wanting a low doc loan? If it’s a lack of tax return, that’s not a problem, or is he/she wanting to borrow above CBA serviceability levels on actual income?

Your friend may care to register an ABN for future reference. As investors go along, being able to make a low doc application can be a real tool, and enables the investor to make their own decisions regarding affordability and not be so constrained by conventional serviceability models.

Cheers

Kristine

 

[Rolf Schaefer]

Most No Doc loans are at a max LVR of 70% (no ABN required, no assets & liabilities must be declared) ;

some are available at 80% LVR (2 yr ABN is required as well as all assets and liabilities must be declared).

 

[Qlds007]

Found out by mistake that PMI have just changed their policy on lodoc PAYG at 80% and that is they can require the applicant to provide copies of payslips and Group Certificate.

Thankfully GE do not have this requirement and will lend lodoc to PAYG applicants only without other income evidence.

For 80% lodoc you are paying around 7.6% variable without too many frills.

 

[Rolf Latham]

Hiya

On 500 k or above you can get early 7s variable, if you are willing to pay an LMI premium, of between .5 and 1 % of the loan amount.

Available to PAYG that have registered an ABN.

This type of product does need an income declaration though.

many people prefer the simpler no doc, which doesnt require income to be declared

ta
rolf