Low-doc loans - how easy to get?

Wylie there's a few things you've mentioned that worry me a little.

* It doesn't matter how much equity you've got. This does not increase your affordability.

* You've suggested that you're not self employed, but part time PAYG. This would preclude a person from a lo doc loan.

* Residential lenders don't look at the rent from an individual property in isolation. They must take into account the bigger picture of all your other assets, liabilities and living expenses.

The qualifying criteria for lo doc lending tends to be minimum 2 years of self employment, plus at least one form of pseudo income verification. In many cases people hold an ABN so it's possible to fool the bank into believing they're self employed, even though they're not.

If you are genuinely self employed for more than 2 years, you qualify for a lo doc loan. If you're not self employed, it may be possible to make the bank believe you are, but technically you don't qualify for a lo doc loan.

I don't doubt that you trust your broker friend or that they're acting in your interests. This doesn't mean that they're 100% above board with the application. I'll do things for my brother which I wouldn't do for most of the other people I deal with. For some people I will stretch the truth because I do know them better and know they can afford the loan, for most though there is no grey area.
 
I get what you are saying Peter. I am genuinely self-employed in that I do work using my ABN. Is there some grey area? Maybe that is how this is being done. I do know there are no rubbery figures used. I do know I had to have had an ABN for more than two years. This is all above board, with me doing work under my ABN, paying tax on that income.

I'm guessing some here think I'm too trusting, but this broker has been helping us get loans for many years and is scrupulously honest. If there is a grey area he has used, he must feel he can justify it and answer to it. I do know he wouldn't risk doing anything dodgy for either him or us.

Does working as a casual differ from PPT? I've just gone PPT.
 
I would add that this thread was not really for me to justify my loan, but more that I've read here that low-doc loans are no longer available. I've just got one. I was just curious.
 
Hi Wylie, that sounds more reasonable. I think most brokers will have stories of people without an income expecting lo doc loans simply because they've got a large deposit.

Like others have indicated, I haven't written a lo doc loan in years. They are still available but the criteria are generally so closed that we've found that if you genuinely qualify for a lo doc loan, a little more digging can usually get a full doc loan across the line. There are exceptions, but these are very rare.

We've often observed that many lo doc loans get written simply because someone doesn't want to do the work to go digging and to push a tricky deal through.
 
Similar to above, each time someone has mentioned loc doc loan

A - They have no income to support loan
B - With what they have been able to provide have been able to get full doc approved.


Sounds like there is more to this then original post of $20k. You have been using this broker for a long time and have faith in him, he's been able to get you across then line, it's a win.
 
There are lots of reasons why Low Doc is still valid, in my opinion.

For property investors who have rental income which would usually be discounted, such as holiday lets, self managing by the room etc, low doc is a great tool.

For newly self employed borrowers Low doc can also be the only way qualify for a loan. While many lenders require 2 years abn registered (low doc or full doc) there are a couple of lenders who only require 12 months registration, or for income under the threshold, no registration at all.


I understand brokers concerns with fraud, however fraud is just as easily done with tax returns as it is with Bas, or an accountants verification, or payslips for that matter.
NCCP requires lenders and brokers to make reasonable inquiries as to a borrowers financial position. It doesn't state how this must be achieved.
 
I still don't personally see much come past the desk that would fit the space.

For property investors who have rental income which would usually be discounted, such as holiday lets, self managing by the room etc, low doc is a great tool.

1.Most recent taxation return
2.Twelve months rental credits into an account
3.Most recent external valuation report

Room by room is harder, but have still got it approved based on tax return along with income into account over 12months.

For newly self employed borrowers Low doc can also be the only way qualify for a loan. While many lenders require 2 years abn registered (low doc or full doc) there are a couple of lenders who only require 12 months registration, or for income under the threshold, no registration at all.

12 months BAS with P & L and accountant letter Or 1 year tax return can get full doc in most cases.

Especially when considering LVR with Low Doc.
 
There are lots of reasons why Low Doc is still valid, in my opinion.

For property investors who have rental income which would usually be discounted, such as holiday lets, self managing by the room etc, low doc is a great tool.

For newly self employed borrowers Low doc can also be the only way qualify for a loan. While many lenders require 2 years abn registered (low doc or full doc) there are a couple of lenders who only require 12 months registration, or for income under the threshold, no registration at all.


I understand brokers concerns with fraud, however fraud is just as easily done with tax returns as it is with Bas, or an accountants verification, or payslips for that matter.
NCCP requires lenders and brokers to make reasonable inquiries as to a borrowers financial position. It doesn't state how this must be achieved.

Agreed
Low doc is not a dirty word and can be very useful, one shoe does not fit all. Just processed my first low doc loan for my development in Melb, excellent product, competitive and relatively easy to source RAMs.

Mtr
 
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