Can I get a commercial loan without proof of my income?

Share your concerns & ideas about commercial property loans in Australia.
Post Reply
pranaya
Posts: 46
Joined: Wed Jul 03, 2013 8:34 pm

Can I get a commercial loan without proof of my income?

Post by pranaya »

Hi there!

I am a contractor based in Sydney and I want to invest in a commercial property. I get most of my customers through word of mouth. I do not keep much record of the income that I receive; I just hate the paperwork. Now that is working against me because banks apparently ask for a proof of my income. My current annual income is about $50,000 but I do not have much to prove it except my word.

I was wondering how I can get a commercial loan in such a situation. Is it even possible? I would be grateful if someone could give me some idea on what I can do in this situation.

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Can I get a commercial loan without proof of my income?

Post by Otto Dargan »

Hi and welcome to the forums pranaya.

It may be possible for you to get a no doc commercial loan even without any proof of your income. Due to little regulation for commercial loans, lenders are not legally required to verify your income. This makes it possible for people like you who are in a complex situation to invest in a commercial property.

You need to know some basic things about no doc loans such as:
  • You may be able to borrow up to 65% of the property value.
  • You do not need to show any proof of your income.
  • Lenders prefer investment properties for no doc loans.
  • Standard properties such as offices, warehouses, factories, or retail properties in capital cities are preferred.
  • You may qualify for a loan despite having a bad credit history.
Lenders want the property to meet certain requirements. This is because they are relying on the saleability of the security rather than the financial strength of the borrower since there is no evidence of the borrower’s income. You will, however, need to sign a declaration confirming that you are aware of the repayments and can afford them. You may be able to get a more competitive interest rate if you are able to state your income.

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

pranaya
Posts: 46
Joined: Wed Jul 03, 2013 8:34 pm

Re: Can I get a commercial loan without proof of my income?

Post by pranaya »

Hi Otto, thanks for the insight. It seems that I may qualify for a loan for commercial investment. Is it really true that I do not need to provide any documents from my side? It sounds too good to be true. Also, can I get a no doc loan to invest in a residence?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Can I get a commercial loan without proof of my income?

Post by Otto Dargan »

Hi pranaya,

You are not required to provide documents such as tax returns, business activity statements (BAS), business bank statements, or a letter from your accountant. You may be asked to provide other documents such as statements of your existing commercial loan, evidence of your deposit or the details of the lease of the property.

You can use the funds from a no doc loan to invest in a commercial property, to invest in shares, or for business purposes such as working capital. You cannot, however, use the loan for buying residential property or for personal purposes. That is because such loans are regulated under the National Consumer Credit Protection Act (NCCP) which requires the lenders to verify the borrower’s income.

If you would like to know more about these then you can check out our website. We can also be reached on 1300 889 743 or you can fill in our free assessment form to see if you qualify for a loan or not.

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

pranaya
Posts: 46
Joined: Wed Jul 03, 2013 8:34 pm

Re: Can I get a commercial loan without proof of my income?

Post by pranaya »

Thanks again, Otto. I really appreciate your taking the time to explain things to me. For now I will surf through your website for more information. Cheers!

train
Posts: 45
Joined: Thu Jul 25, 2013 7:00 pm

Re: Can I get a commercial loan without proof of my income?

Post by train »

Hello everyone,

I also want to invest in a commercial property. Although I do not have my tax returns, I do have my business activity statements and bank statements for me. Do I still have to apply for a no doc loan, or are there other options for me?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Can I get a commercial loan without proof of my income?

Post by Otto Dargan »

It may be possible for you to get a low doc commercial loan that will offer a lower interest rate than a no doc loan. Although you may not need your tax returns or financial statements, lenders still ask for some evidence of your income. Generally, you will need an Australian Business Number (ABN) and need to sign an income declaration firm. You may be asked to provide additional documents such as:
  • A letter from your accountant.
  • Business Activity Statements (BAS).
  • Bank account statements.
  • Your rental history.
  • A copy of commercial lease agreement.
You may be able to borrow up to 80% of the purchase price, or up to 65% with a discounted interest rate when buying a commercial property. It is possible for you to borrow up to 80% of the value of properties that you own. If you are refinancing a property then you may be able to borrow up to 80% of the property value, and up to 100% of the value of residential properties that you own.

You may be able to borrow more and pay a lower interest rate if you can provide profit forecasts and interim financial statements.

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

train
Posts: 45
Joined: Thu Jul 25, 2013 7:00 pm

Re: Can I get a commercial loan without proof of my income?

Post by train »

Thank you for the information, Otto. This sounds too complicated to me. I will call you guys and talk in person.

Post Reply