There aren’t many lenders that offer no doc business loans. This is because of the level of risk such loans carry.
They are not regulated by the National Consumer Credit Protection (NCCP) act. This means you’ll need to prove your income if you want to invest in residential property.
Find out what you’ll need to qualify for no doc business loans and how we can help you get approved.
Are no doc business loans available?
No doc business loans are available. However, none of the major banks have them on offer. You’ll need to apply with smaller lenders or a specialist lender.
Lenders usually charge an application fee of 1% to 2% of the total loan value to cover their risk and processing costs.
No doc business loans are also referred to as ‘asset lend’ loans. This is because lenders will mostly rely on your property value being higher than the loan amount.
However, only private no doc business loans tend to be true asset lends. Although it’s a no doc loan, other lenders still do some form of credit assessment when approving your loan.
How much can I borrow?
If you want to buy an investment property, you can borrow up to:
- 60% of the property value through larger second tier lenders. You can get competitive interest rates at this Loan to Value Ratio (LVR).
- 75% of the property value through smaller specialist lenders. However, you’ll likely have to pay higher interest rates.
- 80% of the property value on short term caveat loans through a select few specialist lenders. Please note that interest rates will be significantly expensive in this case.
Please note that you may not be allowed to borrow for an investment property for residential purposes.
If you want to invest or buy a commercial property, you may be able to borrow up to 65% LVR.
Most lenders may not let you borrow more than $1 million on a no doc business loan. This is where a mortgage broker can help you.
We have mortgage brokers who are credit specialists with considerable industry experience. We can help you qualify for a no doc business loan at a higher LVR.
You can discuss your situation and loan needs with one of our mortgage brokers by calling us on 1300 889 743. You can also fill in our free online assessment form and one of us will contact you instead.
What does it mean for a loan to be NCCP unregulated?
No doc business loans aren’t regulated by the NCCP act. This basically means there’s little consumer protection for you as a borrower.
Aside from a lower LVR usually at higher interest rates, you may also have to pay exit fees.
Exit fees are banned for all NCCP regulated loans. However, lenders can charge expensive exit fees for unregulated loans. These fees are usually applicable if you make extra repayments or refinance before a fixed rate term ends.
This is where a good exit strategy comes into play. No doc mortgages usually have a term of 6 to 12 months. If you don’t switch to a full doc mortgage by then, you may have to pay a higher interest rate.
It’s always a good idea to enquire about the exit fees when seeking a quote for a no doc mortgage.
What do I need to provide?
You won’t need to provide any documents to prove your business income. However, you’ll still have to meet other lending criteria.
Instead of income verification documents, lenders will accept your self-declared business income. Some lenders even accept cash flow projections of your business.
Typically, you’ll need to provide your name, ABN, repayment amounts and your declared income. You must not leave any of these out in your business loan proposal.
Some lenders may also need you to confirm your assets and liabilities or net asset position. In some cases, this may include a statutory declaration.
If there are any inconsistencies with the income you declare, lenders may call your accountant to verify it.
It’s recommended that you speak with a professional financial advisor before you apply for a no doc business loan.
No doc business loans FAQs
How high are the interest rates?
The interest rates on no doc business loans tend to be higher than low doc or full doc loans.
However, much of it will depend on the amount of risk your application is to the lender. This includes the lender you choose, your security property and your credit history.
No doc interest rates aren’t usually published and can usually be obtained on application. As a reference, you can expect most lenders to charge a rate of 7% to 11% p.a. depending on your application.
Please note that interest rates aren’t always consistent among lenders. This is why applying with the right lender is very important.
Acceptable securities for no doc business loans
Lenders are generally very particular when it comes to the security property for a no doc business loan. This is because the lender relies solely on the security for the mortgage.
Your security property will likely be accepted as long as it’s:
- Not in a remote location. This includes any bank restricted locations.
- In good condition. Damaged properties may not be accepted.
- Larger than 50m2 if it’s a unit.
- Under 2 hectares if it’s land.
- Easily saleable. This means it must not be a specialised or unusual property type such as a hotel or petrol station.
Lenders prefer investment properties with a current lease in place. Properties occupied by your business will be assessed on a case by case basis.
Our mortgage brokers are specialists in no doc business loans. We know what property types are accepted and can help you qualify for a no doc mortgage. We can also help you apply with the right lender.
Call us on 1300 889 743 or complete our free online assessment form to speak with one of our credit specialists.