How do I qualify for an investor low doc mortgage?

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astral_projection
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How do I qualify for an investor low doc mortgage?

Postby astral_projection » Sat Jul 04, 2015 4:04 pm

Hello everyone,

I’ve been considering investing in a property in Port Pirie, SA. It’s a half-hour drive away from my home and I think it would be a sound and profitable investment. I’ll probably need to borrow over a million dollars to cash in on this opportunity.

The thing is, I’m a professional investor. I earn all my income through my investments and I can’t provide my current income. This is why I’ve been researching for any mortgage that I may be able to take out. One such type of mortgage that came up was an investor low doc loan.

How can I qualify for this investor low doc loan?

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Otto Dargan
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Re: How do I qualify for an investor low doc mortgage?

Postby Otto Dargan » Mon Jul 06, 2015 10:42 am

Hello astral_projection.

Welcome to the forums.

An investor low doc loan isn’t like a standard low doc loan. This mortgage is specifically designed for investors who aren’t able to prove their current income for whatever reason.

In order to qualify for such a mortgage, you’ll need to meet the following requirements:
  • The income you state must be a reasonable amount for your asset position.
  • A signed letter must be provided by your accountant, confirming that investing is your main source of income along with the amount of time you’ve been an investor. The accountant must also confirm the amount of income you’ve declared.
  • Your income can come from investments such as from shares, property or business.
  • You must not borrow more than 60% of the property value.
You don’t need to have a registered Australian Business Number (ABN) or even a Goods and Services Tax (GST) registration to qualify for this mortgage.

Please note that banks and lenders are quite wary about lending low doc mortgages. Also, mortgage insurers like Genworth Financial and QBE LMI may cap their total exposure to one borrower at $2.5 million each meaning you may not be able to borrow as much as you’d wanted to.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

astral_projection
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Joined: Tue Mar 17, 2015 7:29 pm

Re: How do I qualify for an investor low doc mortgage?

Postby astral_projection » Mon Jul 06, 2015 1:36 pm

As long as I can get an amount of around $1 million, I’ll be able to manage everything else. I understand this much better now, thanks. What I want to know now is how to get a better interest rate for my low doc loan. Can you also give me some tips to get my mortgage approved?

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Otto Dargan
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Re: How do I qualify for an investor low doc mortgage?

Postby Otto Dargan » Tue Jul 07, 2015 9:01 am

Hi astral_projection,

In order to get the best interest rates for your low doc mortgage, you’ll need to:
  • Have a big deposit - The more the amount you have in the deposit, the lower the interest rate will be. In order to qualify for competitive interest rates, a minimum of 20% must be provided in the deposit. If you’re able to provide a 40% deposit then some lenders may even offer discounted interest rates, which are on par with full doc rates.
  • Choose the right income evidence - Although you’re taking out a low doc loan, you’re still required to provide some sort of income evidence. You may prove your income through Business Activity Statements (BAS), an accountant’s declaration letter or with business bank statements. Please note that the income evidence documents must be acceptable to the bank’s lending guidelines.
  • Have a clean credit history - It’s no mystery that banks and lenders prefer lending to those with a clean credit history. With a clean credit history, you may be able to qualify for the most competitive low doc interest rates.
Here are a few tips to help you get your low doc investment mortgage approved:
  • Use of rental income - Low doc mortgages allow reduced self-employed income evidence but they don’t allow self-declared rental income. This means you’ll need to provide full income evidence of rent received if you want it counted as your assessable income by the banks.
  • Releasing equity - If you’re cashing our an amount of over $50,000 on a low doc mortgage, most of the lenders will need you to provide a detailed evidence of how the funds will be used.
  • Companies and trusts - As a professional investor, you may already know that borrowing in the name of a company, a unit, a discretionary or a hybrid trust with a low doc mortgage may not be accepted by many lenders.
If you want to learn more about this, you can have a look at our website or the interest rates page for low doc interest rates. You can also call us on 1300 889 743 and talk with one of our credit specialists or fill in our free assessment form.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

astral_projection
Posts: 7
Joined: Tue Mar 17, 2015 7:29 pm

Re: How do I qualify for an investor low doc mortgage?

Postby astral_projection » Tue Jul 07, 2015 3:22 pm

Thanks a lot for everything, Otto. You’ve answered all of my questions and provided a lot of extra info and resources that I can use. I’m truly very grateful for everything. I’ll call your office by the end of the week to discuss all this in detail. Let’s hope you guys can help me get the loan as much as you’ve helped me understand all this. Bye.

Captain Cook
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Re: How do I qualify for an investor low doc mortgage?

Postby Captain Cook » Sat Sep 12, 2015 4:36 pm

Hello,

I’m thinking of buying a commercial investment property but as a freelance web designer, I too can’t provide full evidence of my income. This thread did help me learn about investor low doc mortgages but I’m more interested in a lease doc loan.

I’m not entirely sure how a lease doc commercial loan works. Can anyone explain a bit of this to me and also tell me where I can find commercial loan interest rates? I didn’t find any in the previous interest rates link you posted.

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Otto Dargan
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Re: How do I qualify for an investor low doc mortgage?

Postby Otto Dargan » Mon Sep 14, 2015 8:43 am

Hi Captain Cook,

A lease doc mortgage doesn’t require full income evidence so you may be able to take one out. In such a loan, the strength of the rent income from the property that’s used to secure the loan is relied upon by the lender.

Here are some of the basics that you may want to know:
  • You may be able to borrow up to 70% of the property value with a lease doc loan.
  • You won’t need to provide any payslips, tax returns or financial statements.
  • In order to be acceptable, the security property must be a commercial investment property.
  • The lease must not be to your own company. This means it must be at “arm’s length”.
  • The income you generate from the lease property must be enough to cover the interest on your loan.
You can find commercial loan interest rates here. If you want to learn more, you can give us a call.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Captain Cook
Posts: 11
Joined: Tue Mar 17, 2015 7:34 pm

Re: How do I qualify for an investor low doc mortgage?

Postby Captain Cook » Tue Sep 15, 2015 4:05 pm

Nice. That was exactly what I wanted. I browsed through your website and I find it quite informative and very easy to navigate. You guys seem to know your stuff. You can expect a call from me by the end of this week. We have much to discuss :)


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