Get the low down on low doc loans

By Ellana Christakakis
In Home Loans

What is a low doc or alt doc loan? We get this question from our clients that are self-employed or freelance workers, and for good reason! Being self-employed allows you certain perks and freedoms that employees don’t get, though when it comes to purchasing a home it can become more of a hindrance than a perk.

Between all the documentation required to provide to lenders and the length of time you need to prove income, it can be a deterrent to self-employed applicants when they’re looking to purchase a property. That’s where low doc loans come in!

Also known as alt-doc loans, these were first introduced in Australia in the ’90s by non-bank lenders, these loans tapped into the market that didn’t qualify for mainstream lending and borrowing. Opening an option like this for self-employed people allowed them to get onto the property ladder by providing alternative documentation (outside of payslips) to prove their ability to meet repayments.

So, how do you go about preparing for an Alt Doc Loan? Here are a few things to consider:

Low/Alt Doc doesn’t mean No Doc

While you may not need to supply as much information as a traditional loan may require, it is still very important to note that you still need to have your finances in order, and you still need to supply evidence of income.

To give yourself the best chance of approval, you should have at least a 20% deposit. In some cases, your Accountant may be able to substantiate your ability to afford the loan to satisfy income requirements.

What documents do you need to provide?

You will need to submit a signed Borrower’s Income Declaration with your usual income stated on the document and an ABN or registered business name. Some lenders may require some more documentation such as Business Activity Statements or a GST registration confirmation.

Did you know that Money Quest Group has an alt doc loan available to our self-employed clients? For more information on loan options for self-employed borrowers, have a read of our article.

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