Low Doc Loans Melbourne

What You Need to Know about Low-Doc Loans in Melbourne

If you are self-employed or would otherwise have difficulty proving your income using tax returns, then you may want to speak with someone from Lending Solutions Group about low-doc loans in Melbourne. Low-doc, no-doc or ‘lo-doc’ home loans are loans that do not have the same documentation requirements as other types of mortgage loans. They effectively open up the finance process to individuals who might not otherwise have that option.

The Importance of Low-Doc Home Loans in Melbourne

Let’s start by talking a little more about why low-doc home loans in Melbourne are so important. A low-doc loan will typically be ideal for someone who wants to get a mortgage loan, but cannot qualify for standard financing due to irregular or difficult-to-verify income. Here are some groups of prospective buyers who may see the importance of a low-doc mortgage in Melbourne:

  • Self-employed individuals: If you are self-employed or work for clients as an independent contractor rather than as a formal ‘employee’, then you may struggle to verify your income to a bank as part of a mortgage loan application. Self-employment — while regularly commonplace, and becoming more so thanks to the global rise of the ‘gig economy’ — is still seen as irregular by mortgage lenders. Banks and lenders like to see proof of regular income and ‘stable employment’ when reviewing mortgage applications. Income from contract work or self-employment may be less consistent and more difficult to verify since you will not have the traditional ‘employer pay stub’ that mortgage lenders typically request.
  • Seasonal workers: As with self-employed professionals and independent contractors, seasonal workers may struggle to get mortgage loan consideration due to the irregularity of their work and pay. Some types of seasonal work provide enough income to live off for a whole year. However, banks are uncomfortable with these arrangements and with the idea of a customer not receiving a steady paycheque. Fortunately, seasonal workers can benefit from the same low-doc loans in Australia that self-employed individuals use.

If you fall into any of these groups or are in a similar situation, a low-doc or no-doc home loan may be worth pursuing. Others who might benefit from these types of loans include young professionals who don’t yet have much in the way of income history; new business owners who don’t have a long track record of business earnings or statements yet; or retirees who don’t have pay slips because they are earning most of their ‘income’ from investments or retirement funds.

Fast Facts about Low-Doc Loans in Melbourne

Are you wondering how low-doc mortgage loans or self-employed home loans in Melbourne work? Here are a few fast facts to help you understand what makes these loans different from a standard mortgage lending process:

  • They do not require a pay slip: The big difference between traditional mortgage loans and low-doc loans is that low-doc loans do not require applicants to present pay slips to their lenders. There is an understanding in this type of loan that the applicant either does not have a traditional job or cannot prove their income or creditworthiness by presenting a pay stub.
  • They still typically require some form of documentation: While no-doc home loans are a thing, low-doc loans tend to be more common. In other words, while you won’t have to provide much documentation regarding your income (hence ‘low-doc’), you will likely need to provide some.  If you can’t show your income or wealth on a tax return, you may be able to present a BAS (business activity statement), bank statement, or even an accountant’s declaration that the borrower can afford the loan repayments. No-doc loans, meanwhile, are a form of pure asset-based lending, which means the lender loans you money while using your assets as collateral.
  • They usually come with higher upfront and ongoing payments: One of the important things to understand about low-doc loans is that, in most cases, they represent a bigger risk to the lender than a traditional mortgage loan. Some banks do not even offer these types of loans due to the presumed risk. If the borrower has an extremely high/favourable credit rating, that factor can help set lenders at ease and can affect how the loan and overall deal is structured. In most cases, though, if you are taking out a low-doc loan, you should expect higher payments than you would with a traditional mortgage loan— in terms of both upfront deposit/down payment and interest rates/ongoing payments.

About Lending Solutions Group

At Lending Solutions Group, we pride ourselves on providing alternative mortgage lending options for clients who, for whatever reason, do not meet traditional lending requirements. For instance, if you are self-employed, most banks will require two years of tax returns and financials when you apply for a mortgage loan. If you have recently started a business, you will be required to show a similar amount of financial history. If you can’t come up with these types of financials in Melbourne, you might think you are out of luck with mortgage lending, but you aren’t.

Our team can help you explore options for low-doc and no-doc loans. For low-doc loans, we consider and approve loan applications based on BAS statements or accountant declarations. If you have a strong base of assets, we can even consider a no-doc loan for your situation. In either case, you can expect quality service based on a deep understanding of both your situation and the state of mortgage lending in Australia as a whole. We have been operating for more than 15 years, have won multiple Australian Mortgage Awards, and have made a name for ourselves nationwide as a place where prospective clients can come to learn more about the pros and cons of non-conforming loans or low doc loans.

Are you interested in working with us, or in learning more about low-doc loans in Melbourne? Are you tired of being told you can only get a home loan with one year or two years of tax returns, pay stubs, or other proof of income? Do you believe you have the income to afford home loan repayments, even if a traditional bank has denied you? If so, you should sit down with one of our representatives at Lending Solutions Group. Contact us today to schedule an appointment.

To discuss how Lending Solutions Group can assist you, please contact Scott Vine:

Email: scott@lendingsolutionsgroup.com.au

Mobile: 0418 10 10 65

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Common Mistakes People Make Regarding Low-Doc Loans in Australia

If you are thinking about applying for low-doc loans in Australia/Melbourne, take care to avoid these common pitfalls and mistakes. While these loans can be beneficial for individuals in some situations, that doesn’t mean they don’t come without their risks and cautionary tales.

Not pursuing traditional options first.

In general, it’s smart to think of low-doc loans as a backup plan if you don’t qualify for a conventional mortgage loan. If you have financials to verify your income and your ability to make repayments, you should go that route. Showing more documentation, if you can, will mean lower interest rates and a lower down-payment.

Applying for a low-doc loan because you don’t have much income.

Note again, low-doc loans were designed as home loans for the self-employed in Melbourne and throughout Australia. These individuals have income but can’t always prove that it is consistent or stable. Low-doc loans do not provide an easier path to mortgage lending for people with little or no income. For people with the right financial situation, mortgage loans are a manageable way of buying a home. For people with insufficient income, they can be an unsustainable burden that leads to financial ruin. This fact doesn’t change in a low-doc loan situation.

Not thinking long term.

For some buyers, low-doc loans are the only real option for getting mortgage lending and purchasing a home. However, just because a low-doc loan is your only option right now doesn’t mean it will always be. You may be self-employed right now, but perhaps you’re job hunting and hoping to land a more traditional job shortly. In this case, you may be able to use your low-doc loan as a stepping stone, and then refinance for a more competitive interest rate when your situation changes. It’s always good to think long term in this way — and to chat with your lender about the steps necessary to refinance your loan if/when you are ready. Not planning can mean spending years with a higher interest rate than you need to be paying.

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