If you are self employed you may find it hard to meet the requirements for a full doc home loan. In this case, a low doc home loan could be the right solution for you.
Find out if you qualify for a low doc home loan in Australia: http://www.homeloanexperts.com.au/low-doc-loans/low-doc-loan-calculator/
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Are you self employed and looking for a home loan? Are you unable to prove your income through traditional means?
All is not lost! You may be eligible for a low doc loan.
In this video, we’ll show you how much you can borrow and what you can do to avoid being declined.
But first, meet John.
John has been running a successful business and is looking to buy a home.
When he goes to the bank, they reject his loan application because he wasn’t able to verify his income!
Usually lenders will need 2 years worth of tax returns for yourself and your business.
But John doesn’t have up to date tax returns and his income has increased significantly in the last year.
So what can John do?
Lenders need to see proof of income. It’s the law!
Under the NCCP Act lenders are required to verify your income.
Luckily, a low doc loan will allow John to use alternative documents to prove his income.
There are three main ways that John can verify his income:
– He can use 12 months BAS statements showing a high turnover for his business
– An accountants letter confirming his income
– Or business bank statements showing a strong cash flow.
Alternatively, John can use old tax returns but this isn’t accepted by many lenders.
As you can see, there are plenty of ways to get your loan approved without the need to provide your current tax returns and financials!
Most banks will require that John’s ABN has been set up for at least two years but there are some that will accept an ABN that’s only been setup recently!
John has all the paper work in order, so how much can he borrow?
Generally, the maximum a bank will lend with a low doc loan is 80% of the property value.
At 80%, John will be able to get a home loan priced only slightly higher than normal loans. In some cases, you may be able to get a low doc loan at the same interest rate as a standard home loan!
There are cases where a lender will approve a low doc loan at 90% of the property value at a higher interest rate.
Some loan types such as business loans or loans in the name of a company are not covered by the NCCP Act.
In this case some specialist lenders could offer John a no doc loan without any income evidence at all. These lenders will have a higher rate and John must have a large deposit to get approved.
Low doc loans can be complex, so make sure you speak to a mortgage broker.
The Home Loan Experts Low Doc Loan Calculator can give you a good guide as to whether you’ll be eligible for this type of loan.
So what happened to John?
Well, John got all his documents in order and contacted the Home Loan Experts.
We found the best lender that could cater to his situation.
John’s now a happy man and is enjoying his brand new home.
And you can too by contacting us today!