What is Income in Lo-Doc terms?
- Thread starter duncan_m
- Start date
Hi
Hehehe, gee, given the recent press I dont think you will get a black and white answer
The borrower needs to decide whether unrealised cap gain, return of capital portion, or any other form of income is to be treated as income in a lo doc appln.
The reality is that some lenders have very specific instructions as to what does constitue income.
In most instancess borrowers do not have the rtns to show the income the are declaring. That may be for various reasons, including timing. About one in 5 of the lo doc loans we do are for clients that have plenty of taxable income, but their structures are so convoluted that they feel they would rather use lo doc than produce the filing cabinet.
Ta
Rolf
Hehehe, gee, given the recent press I dont think you will get a black and white answer
The borrower needs to decide whether unrealised cap gain, return of capital portion, or any other form of income is to be treated as income in a lo doc appln.
The reality is that some lenders have very specific instructions as to what does constitue income.
In most instancess borrowers do not have the rtns to show the income the are declaring. That may be for various reasons, including timing. About one in 5 of the lo doc loans we do are for clients that have plenty of taxable income, but their structures are so convoluted that they feel they would rather use lo doc than produce the filing cabinet.
Ta
Rolf
Rolf Latham said:
Rolf,
Re "do not have the rtns .....various reasons, including timing"....... Does one need to prove or indicated that they have always lodged ITRs in the past? (i.e. "have not lodged the 2003 ITR as I have approval from ATO for an extention to lodge the 2003 ITR" etc)
Second question:
It has been indicated in the press that ATO are looking into these type of loans. I do wonder what applicants state in these lo doc applications? (I have not applied for one yet, so dunno what's required in these applications. (i.e. one states that they have all this (gross) income and yet when ITRs is lodged later on, their income was only this much). How do the banks confirm the source/s of the income stated on the lo doc app? Also read somewhere that they make ya sign a stat dec saying that "you can/will pay back the loan" etc. That right?
Hiya
The purpose of the lender asking for some form of income statement is simply this:
If you default and they need to foreclose, its easier if they have made reasonable inquiry that you can "afford" the loan.
Ta
rolf
The purpose of the lender asking for some form of income statement is simply this:
If you default and they need to foreclose, its easier if they have made reasonable inquiry that you can "afford" the loan.
Ta
rolf
Hiya
GST isnt regarded by anyone as income I dont think.
In my case its something that comes in and goes out
Ta
rolf
GST isnt regarded by anyone as income I dont think.
In my case its something that comes in and goes out
Ta
rolf
I would agree with Rolf.
50% of the Lodoc deals we do in Qld are not because clients are not able to show sufficient income it is merely that the structures we have established whether it be a Trust or Pty Ltd are to complicated and probably not easily able to be understood by the average Bank Johnnie.
Clients on a PAYG wage would only use Lodoc where they have a second income or consistant income on a short term casual basis which may not be accepted by every lender.
All in all the facility certainly speeds up the approval process for clients especially those who have contractual time constraints.
Cheers
Richard
First Home Owners Group Pty Ltd
[email protected]
50% of the Lodoc deals we do in Qld are not because clients are not able to show sufficient income it is merely that the structures we have established whether it be a Trust or Pty Ltd are to complicated and probably not easily able to be understood by the average Bank Johnnie.
Clients on a PAYG wage would only use Lodoc where they have a second income or consistant income on a short term casual basis which may not be accepted by every lender.
All in all the facility certainly speeds up the approval process for clients especially those who have contractual time constraints.
Cheers
Richard
First Home Owners Group Pty Ltd
[email protected]
With my rental incomes, a lending institution typically takes account of 70% of rental income- but they take full account of expenses.
The 30% of my rental income they ignore is bigger than MrsW's income (I've had 97% occupancy in the (almost) two years in my properties- and that takes into account the recalcitrant tenant who did not pay three months' rent). And that income is fully declared for tax. I think I'd have a case for declaring that in a LoDoc application.
The 30% of my rental income they ignore is bigger than MrsW's income (I've had 97% occupancy in the (almost) two years in my properties- and that takes into account the recalcitrant tenant who did not pay three months' rent). And that income is fully declared for tax. I think I'd have a case for declaring that in a LoDoc application.
