Nowadays, the loan systems are changing as per the changing employment scenario, as many people are now self-employed. In this respect, the ‘no doc’ loans were on the rise, but turns out that it is a myth now. So, there was a thing called the ‘no doc’ loans back in the day when lenders would really give loans to people who did not have enough financial documents to prove their net worth.
However, later on, this was phased out by the majority of lenders, and this brought a new scheme called the ‘low doc’ loan, which is equally popular lately, as it offers loans with less documentation, unlike no documents for ‘no doc’ loans, and is still a good enough solution for self-employed people.
Eligibility and Requirements for Low Doc Loans
To get a low doc residential home loan, there are a few eligibility criteria and requirements. It is advisable to consult with a licensed mortgage broker to help you apply for loans in a hassle-free manner. Given below are the documents that will be required by a lender or a mortgage broker when you apply for a low doc loan.
Declaration of Income: A lender will ask the borrower to sign a declaration to confirm their income, any existing liabilities and other financial details.
Assets and Liabilities Declaration: Another declaration will be signed by the borrowers that outlines their current net worth by listing their assets, like investments or savings, and liabilities, like car loans or credit card debt. This information is used by a mortgage broker in Sydney to assess the financial health of the borrower and their ability to meet mortgage repayments.
Business Activity Statements (BAS): For a self-employed person, copies of their Business Activity Statements for the past 1–2 years should be presented, and this would be considered as proof of income.
Recent Bank Statements: The lenders will also ask for copies of recent bank statements for at least the past 3–6 months to assess the financial stability of the borrower.
Letter from the Accountant: A mortgage broker in Melbourne can also request a letter from the accountant to confirm that the financial information the borrower has provided is correct.
There are various benefits of low doc loans for self-employed people, as they offer easy and fast loan applications. Also, when you consult with a mortgage broker, they will offer tailored loan schemes with flexible repayment structures.
