The Low-Down on ‘Low Doc’ Home Loans

The Low-Down on ‘Low Doc’ Home Loans

Low doc loans have become a necessity in this fast-moving world. More people are breaking away from traditional 9-to-5 jobs and are looking to start a small business of their own. It’s one of the biggest reasons why low documentation loans are needed. If you’re a small business owner or self-employed, it might be tougher to be eligible for a traditional home loan. It depends on your documentation and your personal circumstances. So, what should you know about a low document home loan?

Low Doc Doesn’t Mean Zero Documentation

There is much confusion over low documentation loans with many believing they don’t need to go through rigorous checks or provide proof of income. While a low doc home loan mightn’t be as rigorous as some standard loans, you still must meet the lender’s criteria. You also need to provide some documentation. Of course, this documentation can be different from the ones you’d normally rely on. For instance, you could provide a business activity statement, along with personal and business bank accounts. 

Will Everyone Be Eligible for Low Doc Loans?

A low doc home loan can be incredibly viable for those with alternative sources of income and those who don’t have standard income proof. For instance, you are recently self-employed. You have your most recent tax return and have sufficient assets available. Some low documentation lenders would say you meet their criteria. Of course, not everyone may be accepted for a low doc loan. It depends on your circumstances and whether you have sufficient funds for a deposit. Visit to read about What are Low Doc and Non-Conforming Loans?

Lenders will also think about whether you can actually afford the loan in the short and long term. 

Your Deposit Size Is Crucial

Low doc loans are similar to standard loans – with a few minor exceptions, of course. However, while most lenders would want a deposit of 10%, low doc lenders may want 20% or substantially more. When it comes to low documentation home loans, the size of your deposit really does matter. It is essential to have substantial savings put aside to act as your deposit (independently from other savings you need to show lenders). Having a sizeable deposit shows lenders you’re competent enough to save and does make a difference. 

Always Take Loan Fees into Consideration

As with any loan you are sure to have a loan fee. This is pretty standard but you should always factor in these costs when comparing loans. Some lenders have a one-off loan fee (that acts as a processing fee). It’s a one-time fee that is added to the cost of the loan. However, some lenders have additional fees that are added every month or once a year. This is something you should look into, especially when comparing loans. You want a low doc home loan that is affordable in every sense of the word. You can also read about Loaning Information Assets by clicking here.

Get in the Know with Your Home Loan

A lot of people are quick to dismiss the idea of low documentation home loans. Some believe the loan isn’t best for them while others just don’t know much about them. The reality is that a low doc loan can be the better solution when you don’t qualify for a standard home loan. Remember, lenders have strict rules when it comes to self-employed individuals. If you don’t have the documents to back your application, it’s game over. A low doc home loan can change all that.