No doc home loans no longer exist, but you can still get a home loan without having to provide the standard amount of proof of income.
No doc home loans are no longer offered in Australia following the global financial crisis. However, there are still options for borrowers who can't certify their income using PAYG pay slips.
Instead, many lenders offer low doc home loans, which require you to provide a limited form of income evidence.
Find out about low doc home loans
What were no doc home loans?
No doc home loans allowed borrowers to obtain finance without providing proof of income. Following the global financial crisis, lenders no longer offered these loans. This was due to the inherent risk involved. However, low doc loans still exist in Australia. These loans, sometimes called alt doc loans, allow borrowers to provide alternative forms of income verification.
How do low doc home loans work?
As the name suggests, low doc home loans are different to full documentation loans because they don’t require borrowers to supply the same financial information about their income when applying. The information you’ll have to supply to take out a low doc home loan can vary from one lender to the next, but typically it will include a signed declaration of your income, tax returns and Business Activity Statements.
However, the downside of a low doc home loan is that without having seen sufficient proof of your income, banks will view you as posing a higher risk of being unable to pay your loan back. As a result, low doc loans tend to attract higher interest rates and extra fees.
Can a no doc loan moves to normal loans?
Hi Violets,
Thank you for your question and for contacting finder.com.au we are a financial comparison website and general information service we are not mortgage specialists so can only offer general advice.
Basically, the difference between a no doc home loan and a regular home loan is that the no doc home loans are available to borrowers who struggle to provide any proof of financial information about their income when applying. Though there are lenders who offer no doc home loans, but they are only a few in Australia.
So in case you have been accepted for a no doc home loan, there might be difficulties in moving to a full documentation regular home loan as most likely you will be asked to submit your financial information like proof of income, assets, other liabilities, etc. Nonetheless, please note that your approval for a regular home loan would vary from lender to lender, so it’s best to get in touch with the lender first to discuss your chances of approval before your submit your application. Alternatively, you can also speak with a mortgage broker who will take your circumstances into account and can offer you a range of lending options.
Cheers,
May
I have a bad credit rating due to an unpaid, disputed mastdeposit, mastercard bill. if I have 40,000 deposit saved, how much could I borrow on a low doc loan, and what would the repayments be over 15 years ?? thank you
Hi Greg,
Thanks for your question.
Please note that finder.com.au is an online comparison service and is not a product issuer. If you would like to discuss your eligibility or options, please get in touch with a lender featured on this page.
Cheers,
Shirley
I would like to know if there is a reputable lender who will approve a loan to purchase a home with no documentation of proof of income. However, I have recently sold a home and have money in the bank. Thanks for your anticipated assistance.
Hi Vivian,
Thanks for your question.
Unfortunately all reputable lenders require some kind of documentation to assess your borrowing position.
If you have trouble finding a home loan, you may want to speak to a mortgage broker.
Cheers,
Shirley