No doc home loans

No doc home loans are loans that don't require documents to prove your income. Payslips, tax returns, bank statements, letters from your accountant – none of these are required with a no doc loan.

Understandably, this gives no doc borrowers a lot of leeway. In the past, the criteria for these loans was very loose, and borrowers could fudge the numbers to get home loan approval.

Nowadays, banks and lenders are much more aware of the fact that without proof of income, the borrower becomes a much riskier home loan candidate.

Which is why no doc home loans are no longer offered by most Australian lenders. This includes the Big Four banks and most major lenders. It may be possible to get a no doc loan with a specialist lender who provides a non-conforming loan, but there may be a better option for borrowers who can't certify their income using PAYG pay slips: low doc home loans. But first...

How do no doc home loans work?

If you can't provide evidence of your income (such as with payslips) and you don't have alternative documentation (such as an accountant's letter), you could try to find a no doc loan. These loans are typically offered through small, specialist lenders and private lenders.

The specific conditions of the loan depend on the lender. Most will require a credit check or ask you to sign a statement declaring that you are able to repay the loan.

If your loan is secured against a property, which most home loans are, the lender will likely have criteria around the property you're buying, such as location, size and the condition of the building.

No doc loans aren't designed to be held for 30 years the same way a normal home loan is. This is because no doc loans usually have a much higher interest rate than standard residential home loans. Often, the lender will require you to create an exit plan showing how you intend to repay the loan, for example in 2 years' time when you have built up proof of income, you'll refinance to a normal home loan.

Can you buy a residential home with a no doc loan?

By definition, no doc loans are for situations and borrowers who fall outside the regulations of the National Consumer Credit Protection (NCCP) Act 2009.

This means it can be harder to buy a home to live in with a no doc loan.

Usually, the loan must be:

• In the name of a company, not a person
• For business or investment purposes
• Secured against a commercial property

If you don't meet the criteria above then your loan will fall under the NCCP regulations and you will need a low doc loan or a regular home loan.

No doc vs low doc loans

While similar, there are a few differences between low and no documentation loans. Both loan types are options for borrowers who don't have the common proof of income, such as regular payslips from PAYG income.

• Low doc loans > allow borrowers to establish proof of income via alternative documents. This includes business activity statements, a signed letter from an accountant and a signed declaration of your income. You may need an ABN as well. Low doc loans generally have higher interest rates than regular home loans, and usually require larger home loan deposits. You can use a low doc loan to buy a residential property.
• No doc loans > have even higher interest rates than low doc loans, and may require deposits of 40% of the purchase price, or even more. You will usually need to sign a declaration stating you are able to make repayments, but the lender won't ask for evidence in the form of documentation. It's harder to use a no doc loan to buy a residential property unless you fall outside the NCCP regulations.

How can you find a no doc loan?

These types of loans are typically not available through mainstream lenders, so you may need to search for a non-conforming or specialist lender.

If you need more help finding a low doc or no doc loan then it could be a good idea to talk to a mortgage broker. They can offer you free, expert advice or point you in the direction of a specialist lender who can help your unique situation.

Find a mortgage broker