Low Doc Loans

Low-doc loans are designed to help self-employed individuals or those who may not have the traditional documentation required by most lenders.

These loans typically require less paperwork than standard mortgages, but come with higher interest rates and fees to offset the perceived risk to lenders.

Unlock Your Homeownership Dreams

Low-doc loans, or low-documentation loans, are tailored for self-employed individuals, contractors, and freelancers who lack traditional financial documents like tax returns or payslips. These loans offer a streamlined process, requiring alternative proof of income such as bank statements, BAS, or an accountant’s declaration.

While low-doc loans provide easier access, they often come with higher interest rates, fees, and lower loan-to-value ratios (LVRs) to offset the perceived risk to lenders. Borrowers may also need a larger deposit and a strong credit history to secure better terms.

Ideal for purchasing, refinancing, or investing in property, low-doc loans are a flexible option for those in non-traditional employment. However, it’s crucial to evaluate your financial situation and work with a knowledgeable mortgage broker to find the right loan while understanding the associated costs.

Why Do Low Doc Loans Have Higher Rates?

Lenders consider self-employed borrowers higher risk due to the lack of guaranteed income documentation. Without full financial proof, lenders may not be completely confident in your ability to make regular repayments. As a result, they may raise interest rates as a form of insurance against potential non-repayment.

How to Make Your Credit History More Attractive

While it can be more challenging to secure a loan with a fluctuating income, there are steps you can take to increase your chances of approval. The Australian Securities and Investments Commission (ASIC) recommends having your finances in order, including up-to-date income tax returns and financial statements.

Improving Your Loan Application

  • 1

    Show Consistency: If you can demonstrate a stable income over at least two years, lenders will be more likely to offer competitive loan rates. This includes providing records such as Business Activity Statements (BAS), bank statements, and interim financial statements.

  • 2

    Strong Financial Records: Ensuring your financial records are complete and accurate helps paint a clearer picture of your financial health for lenders.

  • 3

    Poor Credit History?: If your credit history isn’t perfect, don’t worry. Some lenders may place more emphasis on your future earning potential rather than past issues.

The Long-Term Benefits

While applying for a low-doc loan may take some time and effort, the potential savings from a better loan deal can make the process worthwhile. At Funds Assist Financial Services, we understand the unique challenges self-employed individuals face, and we are here to help you find the most competitive loan options available for your situation.