Low Doc Mortgages Overview
Low doc mortgages are on offer specifically for the self employed market and are designed in a way where income information is not required in the form of tax returns or ATO notices.
Many self employed people are unable to provide this information and hence need to use low doc mortgages to provide them with the finance they require to purchase or refinance a home.
So how does the mortgage provider assess your ability to repay the proposed debt?
This is done by way of an income declaration where you state your annual income and declare that this is the figure you are deriving from your business operation.
The reason that interest rates can sometimes be a little higher than full doc mortgages is that the lender is relying solely on your declaration of income rather than having evidence of income to work with.
There are a number of low doc mortgages available in the market and each lending institution has differing requirements and lending criteria.
Mortgage interest rates also vary between lenders and the rates are generally based on the amount of risk involved in the type of property being purchase from a location perspective and more so from an LVR point of view.
Generally most low doc mortgage providers require proof of ABN registration, what is mandatory is having GST registration if you are claiming an income greater than $75,000.
Some lending institutions require both ABN and GST registration regardless of income level with some requiring a minimum 2 years ABN registration and others only requiring ABN registration for one day.
As mentioned, each low doc mortgage provider has their own unique lending criteria and by chatting to one of our consultants you can find out which options may suit you best.
What we have done for your benefit is highlight some key points about low doc mortgages below including some common types of low doc products:
Key Benefits - Low Doc Mortgage
Below is a summary of why a low doc mortgage may benefit you:
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Low doc mortgages allow self employed people who are unable to provide income evidence the opportunity to purchase or refinance a home |
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Wide choice of low doc mortgage providers who offer competitively priced products |
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Lending ratios which can extend up to 90% of the purchase price |
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Mortgage insurance premiums which are quite competitive given the generally lower lending ratio |
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Choice of using a low doc mortgage for either owner occupied or investment purchases |
There are many reasons why a low doc mortgage may benefit you and we invite you to contact us and one of our consultants can help guide you toward the product mort suitable for your individual needs and circumstances.
Standard Variable Low Doc Mortgages
A low doc mortgage which has a standard variable rate simply means that the interest rate can fluctuate based on prevailing market conditions.
The change in rate is generally determined by the RBA but is sometimes also changed by the lending institutions, this can either mean an increase or decrease in the interest rate charged.
Many people are nowadays choosing a fixed rate mortgage given the interest rate fluctuations in recent times. What a variable interest rate does provide you though is a certain level of flexibility within the product structure and an ability to make additional repayments with no cap in place or penalty for doing so.
Some of the other reasons people may choose a variable interest rate product is that of having additional features not generally available on fixed rate mortgages.
Some of those are features like a redraw facility or an offset account.
To find out more just contact one of our low doc mortgage consultants.
Basic Variable Low Doc Mortgages
This type of product is again similar to the above mentioned although it is really a no frills product with minimal features, this type of mortgage is designed to provide a lower interest rate for those who do not require a fully featured product.
You may already have bank accounts, credit cards and cheque books with your existing bank but simply need a mortgage with no additional features and this is where a basic variable product fits the bill.
Why not contact us to find out about the competitive range of basic variable mortgages we have on offer.
Credit Impaired Low Doc Mortgages
As the name suggests, a low doc mortgage which falls into the credit impaired bracket is designed for people who have had a blemish on their credit file.
This is a very common thing to occur and a blemish could be as simply as a default with a telco provider and can range right through to a bankruptcy.
Even though this type of product is a low doc and the applicant has a credit issue there are a number of lending institutions who can still offer finance to help in the purchase or refinance of a home.
The interest rates on these low doc mortgages do vary and depend on the type of credit issue, the amount, whether the default or credit issue is paid, when it was paid and so on.
A number of other factors come into play and the interest rate applicable will be different as each individual's circumstances are different too.
To obtain more information about the options available simply contact us and a consultant will assist.
80% Low Doc Mortgages
This type of low doc mortgage is generally offered by most lending institutions as the lender more comfortable with the amount of equity already in the property right from the get go.
Although the funding gap is sometimes large based on purchase price the benefits are a lower interest rate than higher LVR mortgages and also a reduced mortgage insurance premium, in some cases there is no mortgage insurance premium depending on the lender chosen.
In essence the 80% low doc mortgage provides a lower credit risk for the lending institution and therefore they are able to offer competitively priced product and flexibility of features and benefits.
To get some further information on the wide range of low doc mortgages on offer simply contact us and have a consultant help you in any way you need them to.
90% Low Doc Mortgages
There are more and more people who are self employed and who also require a higher lending ratio to help them purchase a home.
This is where some lenders are able to offer a low doc product which extends up to 90% of the purchase price and in turn this lessens the funding gap for many people.
The interest rates on these high lend products is higher than your standard 80% low doc and this is again based on the risk that a higher lending ratio brings.
There are a limited number of low doc mortgage providers who offer this high lend product and we have access to them all so why not contact one of our consultants to find out more.
There are so many Low Doc Mortgages, so which one is right for me?
This is a question best answered when you speak to one of our consultants who can guide you towards the mort appropriate low doc mortgage although there are some things to think about which will help you determine the potential type of product and they may be:
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How much will you need to borrow based on the amount you have at hand? |
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How long have you had your ABN and or GST registered for? |
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Do you have any credit impairment that you're aware of? |
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Will you require a fully featured product or a no frills product? |
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Do you have equity in an existing home and require a lower LVR mortgage? |
These are simply some of the questions you can ask but we invite you to contact one of our consultants to find out even more about the right type of low doc mortgage for you.
What's my nest step in getting a Low Doc Mortgage?
What you can do is contact us and allow our consultants to assist you in determining your needs based on your individual circumstances and financial position.
From that point we will source the appropriate solutions and present them to you for your review so why not get on the phone or use the contact us web form to get the right mortgage for you.
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