How does a no doc loan work?

Share your concerns & ideas about commercial property loans in Australia.
hitman
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Joined: Thu Mar 12, 2015 5:46 pm

How does a no doc loan work?

Postby hitman » Thu May 14, 2015 8:23 am

Hi there,

I’ve been running a pub in Crawley since last August. It’s only been a little over eight months but the sales have grown beyond my expectations. That’s why I’m looking to expand and buy a bigger property.

However, a few days back, a customer at the pub told me that I can’t qualify for a low doc loan. I asked a friend at the bank about it and he told me that it's because I can't provide evidence of my tax returns yet. He also said that I can qualify for a no doc loan instead.

He was very busy so he couldn’t explain to me how the loan works. Can anyone in this forum help me be clear on this?

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Otto Dargan
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Re: How does a no doc loan work?

Postby Otto Dargan » Thu May 14, 2015 10:41 am

Hi and welcome to the forums hitman.

A no doc commercial loan primarily relies on the value and saleability of the security rather than the strength of your personal situation.

You may not be required to provide supporting documents such as tax returns, business activity statements (BAS), or an accountant’s letter.

You may still need to provide other documents such as statements for your existing commercial loan, evidence of your deposit, or the particulars of the lease for the property. You may also need to sign a declaration form confirming that you are aware of the repayments and can afford them.

It should be noted that you may use the funds from the loan for commercial property investment purposes, investment in shares, or for other business purposes like day to day transactions. You may not be able to use the funds for personal purposes or to buy residential investment properties.

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

hitman
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Joined: Thu Mar 12, 2015 5:46 pm

Re: How does a no doc loan work?

Postby hitman » Thu May 14, 2015 12:22 pm

I get it now. Thanks, Otto. This loan seems like a great option for people like me but there must be a catch. Do lenders charge higher interest rates for no doc commercial loans?

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Otto Dargan
Mortgage Specialist
Posts: 7657
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: How does a no doc loan work?

Postby Otto Dargan » Thu May 14, 2015 4:31 pm

Hi hitman,

Lenders consider no doc commercial loans far more riskier than normal home loans. Therefore, the interest rates for this type of loan may be four to five percent higher than the interest rate for a normal home loan.

The interest rates may vary depending upon the lenders that you qualify with, your credit history, the percentage of the property value that you borrow, and the overall risk of your application.

It should be noted that since these loans are not regulated under National Consumer Credit Protection Act (NCCP), lenders may charge you exit fees if you refinance or repay the loan earlier than the end of the loan term.

It is recommended that you talk to a specialist mortgage broker to help you formulate a proper exit strategy to repay the loan.

You can go through our website to find out more about no doc commercial loans. If you want help in finding a suitable for lender, you can give us a call on 1300 889 743 or fill in our free assessment form.

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

hitman
Posts: 7
Joined: Thu Mar 12, 2015 5:46 pm

Re: How does a no doc loan work?

Postby hitman » Sun May 17, 2015 8:11 am

Taking out this kind of loan seems like a huge risk because of the high interest rates and exit fees. I’ll need help in minimizing these costs as much as possible. I’ll give you a call tomorrow to discuss my situation in detail. Have a good day!

bond
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Joined: Thu Mar 12, 2015 5:53 pm

Re: How does a no doc loan work?

Postby bond » Wed May 20, 2015 10:21 am

Hey there,

I’m in a similar situation to hitman here and I’m also looking to get a commercial no doc loan.

I found this forum because a friend recommended it to me. He suggested me to seek answers to my loan related questions here. It’s been quite informative for me going through this thread.

I’ve got one question though. Do lenders accept all kinds of properties as security for this type of loan?

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: How does a no doc loan work?

Postby Otto Dargan » Wed May 20, 2015 1:31 pm

Hello bond,

Lenders may accept only some properties as security, such as:
  • Properties in capital cities and major regional locations.
  • Unspecialised properties such as offices, factories, warehouses, and retail properties.
  • Commercial, industrial, or mixed-use zoning properties.
  • Investment properties with a current lease in place.
It should be noted that a property must be readily saleable and in a good condition to be accepted as security for a commercial loan. A property at a remote location, a residentially zoned property, or a property that is occupied by your business may not be accepted.

You can go through our website to find out more.

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

bond
Posts: 8
Joined: Thu Mar 12, 2015 5:53 pm

Re: How does a no doc loan work?

Postby bond » Wed May 20, 2015 3:45 pm

I didn’t think you’d reply this quick, mate! I appreciate it. I’ve been going through your website for the last hour and I think it’s amazing. I learnt so much. I’ll give you a call by the end of this week to get started on the application process.

P.S. My cousin is thinking about purchasing a home. I’ll definitely recommend your services to her. Cheers, mate!


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