Agree, if you have to provide BAS statements to show support of the income you have stated, then may as well get yoru financials done and pay a cheaper rate.
The cash out component has been restricted for a fair while now, it has always been a curious argument ( situation ) where a line of credit has been done as a lo-doc.
Once the LOC is established, you can use the funds for any purpose, but as a standard loan you can't have funds out? Strange policies exist sometimes.