What is fundamental difference between LO and NO doc

[JohnAJones]

Under what circumstances do the lenders check on assets and liabilities. Or do they for these type of loans.

Please don't talk about fraud etc.

I just want to know. Thanks.

 

[Simon]

The difference is that with a LODOC you state what your income is without the need to prove it.

A NODOC you certify that you can afford the loan - no figure is named.

 

[JohnAJones]

Where do assets and liabilities come into play. Or perhaps they do not with LO and NO doc loans.

 

[tobe]

generally no A and L is required for a no doc loan, and one is required for a low doc, though it really does depend on the lender. I ran into some trouble a couple of years ago with A & L's that didnt fit with the assessors view of the income stated, ie a share investor making 50k/y on a share portfolio of 300k as stated on his A&L. It was cleared up eventually when he said he was a share investor and trader.

 

[Rodger]

No doc Loans are simply an asset lend. i.e. No income needs to be declared at all .current loan statments need to be supplied on application to lender and must not show late payments arrears or overdues .
the property will be valued and borrowings are usually restricted to 70% of the banks valuation.
Rodger the mortgage broker.

 

[grantc]

As stated with a Lodoc loan u need to supply A & L. Your declared income must be able to service your stated liabilities + the new loan.
From what Ive seen & heard your declared income should be in line with your assets. ie. an income 10% of your assets seems reasonable.

 

[Medine]

Hi John,

Some lenders have a policy to check all assets and liabilities thoroughly. There are also some lenders who do Lo Doc and don't verify assets that are not to be used as security. As a rule of thumb, the cheaper the Lo Doc fees and charges the more they check.

Cheers, Medine

 

[The Y-man]

...and here was thinking the difference was between the "N" and "L"....

Cheers,

The Y-man