Low doc loans after the GFC
Many Australian lenders have tightened their lending criteria on both full doc and on low doc loans since the GFC, so while low doc loans aren't as easy to get approved, they're still available from a range of lenders. Previously if you were self-employed and could not show a regular income, you could still successfully apply for a home loan and in most cases you simply needed to provide proof of your registered business, provide a signed document to self-certify your income, and provide a 20% deposit.
In the wake of the global financial crisis, low doc home loans have now become much more similar to traditional loans. If your loan to value ratio is now more than 60% you will generally need to provide BAS documentation for four previous statement periods. Lenders will also assess your income on the basis that 40% of your turnover is assessable income; however, if you can provide tax return documentation of proof of your business expenses and you can show, for example, that your costs are only 10% of your turnover then more of your income may be taken into consideration by the lender to assess your eligibility.
I would like to borrow 90-95% for an investment property with my current home equity as warrantor for the new loan. Please let me know if you could help
Hi Marcus,
Low deposit home loans typically allow you to borrow up to 95% of the property value. If this is the type of loan you’re looking for, you can view available lenders here.
Please note that this loan program has more rigid application criteria and often comes with additional costs.
Hope this helps!
Cheers,
Richard
I would like to know if there is any possibility of getting a home loan in my situation. My husband and I are both self employed with only 5% deposit. We have no debts. My parents want to guarantee for us.
Hello Lara,
Thank you for your inquiry today. :)
You may consider the low-deposit loans we have featured on our website. It gives you the full-guide on how to apply and which lenders may consider you. Moreover, some lenders may consider giving 100% loan considering that you have your parents’ equity for guarantee. You can read about guarantor loans as your alternative option.
Hope this helps.
Cheers,
Jonathan
Hi there. Can a person on newstart or disability payment obtain a low doc or no doc loan. I have 70% deposit and would therefore only require a loan of 30%. Thank you, Jenny.
Hi Jenny,
Thanks for reaching out.
You can learn more about home loans for Centrelink recipientsand how it works. You can also enquire with a mortgage broker to explore your options. A licensed mortgage broker can help you understand your borrowing power and they can recommend products that will be most suitable for you.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you.
Your ability to qualify for a home loan will depend on the lender’s individual criteria, the amount of your benefit that you’re using to service the loan, as well as any other income sources or assets that could be used to repay the loan.
However, if you have a 70% deposit then this may help your chance of being approved but lenders will treat these applications on a case-by-case basis.
All the best,
Belinda
HELLO,
My house is worth $700000 with a $200000 mortgage, which I have been paying off for 5 years without missing a payment. I have recently come in some money, $200000, so I would like to invest in an investment property or 2 if possible.
My thoughts are that instead of paying off my mortgage, I can buy investment property which will pay my mortgage off when the market rises, and I would still have investment property.
I can then refinance and pay off my mortgage.
I am self employed and I have recently had a gap year. Can my financial info be given for the 5 years before my gap year? Can I borrow even though my income on paper has only been $35000?
thanks
Julie
Hi Julie,
thanks for the question.
The answers to these questions will differ depending on the lender you approach, so it might be a good idea to contact a lender for a loan you’re interested in directly to see what their policies are regarding your income and history.
Cheers,
Marc.
Hi, I am currently living overseas but am Australian. I have a large deposit for a property however do not currently have an income as I have returned to studying. I am wondering if a no doc or low doc loan would be possible for me to obtain?
Hi Jay,
Thanks for your question.
A no doc home loan needs to National Consumer Credit Protection Act (NCCP) unregulated. This means that your loan must either be for business purposes, investment purposes or be in the name of a company of trust.
With a low doc loan, you are still required to show some evidence of income, such as a Business Activity Statement or your accountant’s declaration.
It’s advisable for you to speak to a mortgage specialist regarding your situation. They are home loan experts who can help you find the right loan for your situation.
Cheers,
Shirley