Looking for a low doc loan to purchase an investment property

Any general questions you might have in regards to loans and finance.
Zachariah
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Joined: Mon Apr 01, 2019 6:22 pm

Looking for a low doc loan to purchase an investment property

Postby Zachariah » Mon Apr 01, 2019 6:24 pm

Hi, I’m self-employed, coming up on 3 years (ABN) with 12 years in the trucking industry. I would like to refinance my house to purchase an investment property. My property is valued at $750,000 with a $350,000 mortgage. I also have a trucking lease with $100,000 owing. The purchase price is $500,000 and the rental yield is 7%. My credit history is clear. I have 1 year’s tax return without ATO NOA. Is a low doc option suitable for me? If so, what should I be looking out for?

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Otto Dargan
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Re: Looking for a low doc loan to purchase an investment property

Postby Otto Dargan » Mon Apr 01, 2019 7:17 pm

Hello Zachariah. Welcome to the forums.

Low doc loans are designed specifically for self-employed borrowers such as yourself who do not meet the stringent income verification documents required such as 2 years’ tax returns including the Notice of Assessment (NOA), two years financial statements, and in some cases, BAS statements as well. With a low doc, you provide reduced income evidence in the form of 12 months Business Activity Statement (BAS), Business Account Statements or an accountant’s letter.

These are some of the potential issues you need to be aware of with low doc loans:

  • Higher interest rates: Low doc interest rates will depend on the lenders you qualify with and what sort of verification or supporting documents that you’re able to provide. Some of our lenders offer the same rates as they do for full doc loans.
  • Larger deposit: Lenders generally require a 20% of the purchase price as a deposit for low docs.
  • Lenders Mortgage Insurance (LMI): If you borrow over 60% Loan to Value Ratio (LVR), LMI is generally applicable for low docs. Some will consider lending up to 80% LVR. One of our lenders will consider a 90% low doc loan.

Major lenders no longer approve low doc loans that are used to refinance an existing home loan. Thankfully, some lenders will still refinance a low doc loan.

Speak with one of our specialist mortgage brokers by giving us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a refinance to purchase an investment property.

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

Zachariah
Posts: 3
Joined: Mon Apr 01, 2019 6:22 pm

Re: Looking for a low doc loan to purchase an investment property

Postby Zachariah » Mon Apr 01, 2019 8:01 pm

Great, this is what I was looking for. Now, regarding the income verification, is 1 years tax returns enough or do I need to provide additional documents?

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Otto Dargan
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Location: Sydney, Australia
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Re: Looking for a low doc loan to purchase an investment property

Postby Otto Dargan » Tue Apr 02, 2019 11:41 am

Hi Zachariah,

Under the National Consumer Credit Protection (NCCP) Act, lenders are required to have some income verification before they can approve your mortgage. Different lenders have different requirements and will accept different document types to prove your income.

The main documents that can be used to verify your income are:

  • 12 months’ BAS statements showing a high turnover.
  • An accountant’s letter verifying your income.
  • Business bank statements showing a high turnover.
  • Old tax returns (over 24 months).
  • Interim financial statements.

If you can provide one or a few of these documents, you can qualify for a low doc loan, and possibly with a better interest rate.

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

Zachariah
Posts: 3
Joined: Mon Apr 01, 2019 6:22 pm

Re: Looking for a low doc loan to purchase an investment property

Postby Zachariah » Tue Apr 02, 2019 1:36 pm

Sounds good. I’ve filled in your assessment form. Is there anything else I should be aware of?

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Otto Dargan
Mortgage Specialist
Posts: 7600
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Looking for a low doc loan to purchase an investment property

Postby Otto Dargan » Tue Apr 02, 2019 2:42 pm

Hi Zachariah,

Lenders have cashout restrictions when releasing more than $50,000 on a low doc loan, the vast majority of lenders will require detailed evidence of how the funds will be used. Investing in residential property is preferred over investment in shares.
Some lenders do not have a cash out policy.

Give us a call on 1300 889 743 or fill in our free assessment form to access a range of lenders who offerlow doc investment loans.

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


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