Major lender RAMS have pulled up stumps on low doc loans, a bombshell for self-employed borrowers who are unable to provide traditional income evidence.
The good news? There are a select few lenders offering low doc and even no doc home loan solutions.
Call us on 1300 889 743 or fill in our online enquiry form if you’re currently a RAMS low doc customer or you’re looking for a low doc option. Lender choice is now limited.
What happened to RAMS low doc loans?
RAMS had a home loan known as the RAMS self employed ‘lo doc’ home loan which was very popular with business owners as it had a low interest rate and easy approval criteria.
In many cases, you would simply need to provide an accountant’s letter as proof of your income.
There were other options if you only had:
From 12 April 2019, Westpac, the owner of Rams, will no longer be offering this low doc home loan product.
While there hasn’t been a clear indication from Westpac as to why they made this decision, it may have been as a result of the fallout from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
We believe the lender’s weighting to low doc loans was becoming a little too high for their risk appetite, particularly since RAMS’ rates tended to be a lot lower than those from other lenders offering similar products.
What will happen to current borrowers?
If you currently have a low doc loan with another lender, we don’t expect to see changes to their lending policies any time soon.
However, there is the risk that their interest rates will be increased later on.
Only time will tell.
However, to avoid becoming a “mortgage prisoner”, it’s important that you check your interest rate regularly.
Speak to a mortgage broker about whether now is the right for you to refinance your mortgage.
Do regulators have a problem with lo doc loans?
During the Royal Commission proceedings, it was flagged that products like low doc loans could be perceived by the public, government and the media to be so-called ‘liar loans’ because they allow people who are not paying tax to get approved.
This is a misleading view and far from the truth.
The reality is that self-employed borrowers, whether sole traders, partnerships or companies, often lodge their tax returns late.
They also often have complex financial situations or their historical tax returns do not reflect their current income.
We think it’s important that these borrowers are given options to buy a house just like anyone else, as long as they can show alternative income evidence showing that they are operating at a profit.
Find out if you qualify for a low doc loan
Simply speak with one of our experienced mortgage brokers by calling 1300 889 743 or by completing our online assessment form.
We’re specialists in assisting borrowers who have unusual employment or cannot otherwise prove their income with traditional income evidence.