Understanding Low Doc Home Loans

The Australian mortgage industry has maturedincome. This normally prolongs standard investment
considerably over the years and has started offeringloans. There are mainly three types of low doc home
some of the best mortgage options to residential orloans available.
commercial loan seekers. The old tag of the mortgageNO RATIO LOANS: this loan is for those who don't
industry being too rigid and overall having a painfulwant to declare their income before anyone. Hence,
cumbersome loan process has been almostthere is no debt for income ratio for the consideration
completely wiped out and a new trend has emergedof the loan lender. This type of loan can give a very
which has seen a lot more home loans or mortgagesquick and easy process for those who think that an
being approved in a record amount of time.income citation is going to be their worst nightmare
It has never been better for the Australian consumerwhile applying for a loan. As the lender is taking added
to apply for any kind of home loan or mortgage withrisk by not requiring any verification of income they will
the mortgage companies themselves making life muchgenerally not lend as much against the value of the
easier for the person applying for the loan. Mortgagesecurity property.
consultants now go above and beyond helping theirNO DOC LOANS: for obtaining this loan, the 'no doc
customers choose the right loan for themselves. Eachloan' requires the minimum number of documents and
type of loan is carefully explained and it is made suredocumentations. The loan lender goes through the loan
that the consumers ultimately choose the loan that isrequest from the borrower with no financial
best for his or her situation.documents at all and maximum privacy is given to
One of the options that most mortgage corporations inthese loan candidates as well.
Australia offer to their customers is the low doc homeSTATED-INCOME (LOW DOC) LOANS: for someone
loans option. This is a loan that has seen a lot ofwhose income is fluctuating every day, week or
activity recently and is gaining popularity withmonth, the stated income loan is the best. But this type
consumers.of loan requires the borrower to show his earnings for
Low doc home loans are a mortgage or home loanthe minimum of two years initially and he also has to
where there is no requirement to verify your income.show tax returns and all other bank statements.
But all other documents are required as they are withAlthough low doc loans obviously have appeal for
any other type of home loan. This loan is ideally suitedthose who perhaps don't have their financial
to self-employed individuals, contractors who aredocuments in order or have privacy concerns, those
working independently and investors. This loan typewho have low incomes that would not be sufficient to
also suits people with enough income but who don'tqualify for a standard variable rate loan, should not
want to waste time in bank verification and other timeresort to overstating income on a low doc application
consuming processes. Borrowers should be awarein order to borrow. Lending guidelines are there to
that with low doc style loans a default or similarprotect both the lender and the borrower - defaults
negative listing on your Credit Reference will make youtraumatic for both parties and a mortgagee sale is
ineligible for low doc finance.almost inevitable if income is grossly overstated,
A low doc home loan has an interest rate a little higherparticularly when the borrower is already under
than normal types of loans and mortgages. This said,financial stress.
with some lenders the rate will reduce to theirBy consulting with your experienced mortgage lender
standard variable rate after say a 2 year period,you can find out whether low doc home loans are a
provided you have meet all your interest payments ongood option for you. They are in the best position to
time. This loan is largely for those who want to buycheck which type of loan is best for you and make
investment properties, refinance their existing propertyyour life that much easier.
and who do not have current taxation returns on their