Not all low lenders are created equal!
When you’re looking to apply for a low doc loan, there’s more than just the interest rate to think about.
You need to consider the LMI premium, the application fee (if there is one), the amount that you can borrow and the income verification requirements.
Some lenders are better than others when it comes to alternative documents to prove your income.
Find the right lender
Find out who will approve your loan
Most lenders require that you have a minimum of a 20% deposit and that you have an ABN to prove that you have been self employed for the last two years.
But this isn’t the case with all lenders.
Rather than risking a decline, speak to an experienced broker who will help you apply with the right lender.
Don’t just look at the interest rate
Even though the interest rate is low, there may be other hidden costs. To find out which loan is the cheapest, take a holistic approach and look at the cost of the loan including fees and other charges.
In particular for low doc loans, there’s often LMI or a risk fee charged if you borrow more than 60% of the property value. These fees can vary significantly between different lenders.
Low doc loans should be treated as temporary loans
It’s recommended that you refinance to a full doc loan once you have completed your tax returns. So when choosing your low doc lender, it is much more important to take into consideration the application fee and LMI fee, rather than just the interest rate.
Consider how many years you are likely to keep the loan for and then work out the total cost over that term. This gives you a true comparison between different options.
Can your broker access these lenders?
Unlike most mortgage brokers, our head broker group allows us to form relationships with any lender.
We work with lenders that some of our competitors haven’t even heard of! So you can be sure that we can get your home loan approved at a great interest rate.
You can view our full panel of lenders for more information.
Speak to a mortgage broker today!
To find out which lender has the right low doc loan for your circumstances, contact one of our expert mortgage brokers.Enquire online or call us on 1300 889 743 and find out how to get your home loan approved.
Advantedge is a wholesale lender that offers residential full doc and low doc loans through mortgage brokers and mortgage managers such as RESI Home Loans, BMM (Better Mortgage Management), Ubank, Plan Lending and AFM (Australian First Mortgage).
Advantedge was formerly known as Challenger Financial Services Group and prior to that was known as Interstar. Since being purchased by NAB they have become more competitive in the prime lending market.
They compete with the banks for good quality borrowers and as a result their credit guidelines are relatively strict. Many of their low doc loans for more than 60% of the property value are LMI insured and so must also meet mortgage insurer credit guidelines as well as Advantedge’s.
Most of us know of AMP as an insurer, wealth management or financial planning company however AMP also has a banking licence.
AMP Bank’s Low Doc Package provides 100% offset as well as a unique feature called a Master Limit. However AMP does not actively pursue low doc loans, their core business is to focus on borrowers who can prove their income.
They require a self certification statement, your past 12 months BAS Statements from the ATO and last 6 months primary personal bank statements to assess your suitability for a low doc loan.
One of the big 4 banks ANZ has a strong suite of home loans offered through branch networks, mobile lenders and mortgage brokers.
Currently ANZ offers what they call their “Lo Doc 60 product.” The product is well known for having a simplified low doc process, competitive pricing and its inclusion of ANZ’s Breakfree Package.
They won’t lend over 60% of the property value with a low doc loan. They also use a benchmarking system to assess your BAS, where the industry you work in will effect the percentage of your turnover that they accept as your income.
The BankWest Easy Doc Home Loan is a stricter low doc product requiring an ABN no matter the LVR.
Below 60% LVR (60% of the property value) an ABN is required but with no minimum registration period whilst between 60% and 80% LVR the ABN must have been registered for at least two years and the loan must comply with PMI’s (their LMI provider) lending guidelines and location restrictions.
Bankwest have removed their entire low doc product range from the market as of 16/07/2012.
Adelaide Bank merged with Bendigo Bank in early 2008. Adelaide Bank is of more interest to us as they provide a large number of low doc loans through mortgage brokers.
They have re-branded products through other companies such as National Mortgage Corporation (NMC), Homeloans Ltd., AFG Mortgage Management, Connective Home Loans, Aussie Home Loans, Domain Financial Services, Australian First Mortgage (AFM) and Better Mortgage Management (BMM).
They are well known for flexible lending policy including a no LMI low doc up to 70% LVR and the ability to consider security properties such as serviced apartments, which are not accepted by most lenders. Unfortunately due to changes in the cost of funding their loans they have tightened their credit guidelines and have less competitive pricing.
Bluestone was originally a non-conforming lender owned by several large institutional investors and Barclays Bank. Later they diverged into commercial loans and prime low doc loans, as well as Lite Blue and Business Easy low docs for customers with impaired credit histories.
In early 2008, Bluestone reduced their residential lending business due to funding constraints. Currently the business focuses on servicing their existing loan book and also the loan books of other mortgage lenders. They are not accepting new clients at present.
Citibank has a large mortgage book in Australia which originated almost entirely through mortgage brokers due to the lack of a branch network.
In the past, Citibank’s low doc loans were available for both commercial and residential properties for investment and owner occupied (domestic) purposes.
However, Citibank’s focus is now on borrowers who can verify their income fully. In some situations, they can accept self employed borrowers with financial statement supported by BAS, however they do not have a formal low doc product.
CBA is the largest home loan lender in Australia. Commonwealth has several lending channels including their branch network, mobile lenders (known as mortgage innovators) and mortgage brokers.
CBA is well known by mortgage brokers for being quite different to other banks both in their processes and in their assessment policies.
To CBA, Low Doc is a policy not a product and can therefore be included with their Fixed Rate, Basic Loan or Standard Variable Rate Home Loan. Commonwealth’s LMI provider is Genworth Financial, one of the world’s largest Lenders Mortgage Insurers.
Again like many banks, CBA is not actively targeting the low doc market, however they will accept conservative applications from high quality borrowers.
Now operating in Australia for over 25 years, FirstMac has its own funding backed by securitisation as well as funding re-branded loans through mortgage managers.
In 2007, FirstMac took over management of HSBC’s Australian loan book. They had a LoDoc option on their HomeRun08 loan and X Loan, both of which were generally more expensive than the market.
During the GFC FirstMac decided to discontinue their low doc loan products.
First Permanent Financial Services
A subsidiary of Merrill Lynch Investment Bank, First Permanent is a specialist lender that focuses on funding 100% to 106% loans (Establishment Loan and Investor Loan) for borrowers with a good income but with no savings.
As you can imagine 100% loans are too risky for lenders to approve without obtaining full evidence of their borrowers’ income and as a result First Permanent does not have a low doc loan.
Well known in Australia for their consumer finance, credit lines, personal loans and car loans, GE Money was also a mortgage lender. GE Money is a subsidiary of the multinational giant General Electric Company.
Initially in Australia GE Money was a non-conforming lender that specialised in low doc and full doc loans for credit impaired borrowers. With the acquisition of AFIG in 2004, GE Money moved into the prime lending arena by providing wholesale funding to Wizard Home Loans and a variety of other non-bank mortgage managers and originators.
In 2008, GE Money was very well placed during the sub prime crisis as they were not funded by securitisation and their deep pockets allowed them to continue offering competitive low doc loans for both credit impaired and prime borrowers.
However the parent company decided to close the Australian mortgage business and invest the funds elsewhere in the world where they could obtain a better return on capital. GE Money no longer offers home loans in Australia.
Heritage is one of the largest Building Societies in Australia, however they never decided to enter the low doc market. Their view is that low doc loans are too risky and so they focus on flexible fixed rate loans and discounted basic loans for full doc borrowers.
Although many disagree with this view, Heritage has repeatedly stated that they are not interested in funding low doc loans.
Homeloans Ltd. was originally a mortgage manager based in Perth which then grew rapidly across Australia in partnership with mortgage brokers and mobile lenders.
In recent years, Challenger Financial Services has purchased a 40% stake in the business. Homeloans Ltd. has diverse funding lines which have enabled it to remain a strong non-bank low doc lender with a range of products to suit different types of low doc borrowers.
Owned by NAB, Homeside is NAB‘s broker originated home loans business. Despite being owned and funded by NAB, Homeside has significantly different credit policies and pricing.
Homeside has a professional package known as the Home Plus Lo Doc which can be a combination of both fixed rates and variable rates. Their line of credit, known as a Peak Performance Equity Mortgage Lo Doc, allows low doc borrowers to enjoy flexible loan features along with the ability to self certify their income.
Both of these loans have similar rate discounts to their fully verified income loans but do not require tax returns as proof of income. Homeside is known for having strict credit scoring, which means they will only approve very high quality applications.
IMB Building Society
At over 125 years old IMB is a trusted financial services provider with a strong commitment to customer service.
IMB’s Lo Doc product features a 100% offset account, however it may be at a higher interest rate when compared to other loans on the market. Their loans above 60% LVR must be insured by Genworth Financial, which means that qualifying for a loan is more difficult than with other lenders.
ING is Australia’s 6th largest home loan lender which is quite impressive considering that ING’s loan book was primarily introduced by mortgage brokers as they have no branches.
ING’s Lo Doc Smart Loan and Lo Doc Standard Variable Loan were priced around the bank standard variable. Because of this, ING was never a major low doc lender even though they are renowned for a high level of customer service and excellent pricing on their fully verified income loans.
In 2009, ING withdrew their Lo Doc products entirely, however they still offer some low doc policies via their wholesale funding.
Although the general public haven’t heard much about La Trobe they are well known amongst professional investors, developers and mortgage brokers.
This is because their Lite Doc loan can be used for both prime and credit impaired borrowers, and can be used for small low doc development loans. If your loan is NCCP unregulated then there may be high exit fees.
Established in 1997 Liberty is known as the founder of the non-conforming and specialist lending industry in Australia. Their low doc loans, known as Nova or Private, are designed to cater for good quality customers that don’t fit the banks’ normal lending guidelines.
Their interest rates are generally higher than the banks however they are far more flexible with their lending policy.
Macquarie is a leading provider of banking, financial advisory, investment and funds management. Due to the GFC, Macquarie were forced to remove all their low doc products from the market in 2011.
Currently they offer what they call their “EIV” product, which stands for Extended Income Verification. Although the product is not true ‘low doc loan’ it still offers alternate income evidence with competitive pricing.
Maxis Home Loans
Maxis is a lender focused on offering low fee home loans with a higher level of service. Their market is predominantly in the full doc arena and so they have no low doc loans available.
ME Bank is a Melbourne based bank that focuses on low cost and no frills banking products. Members Equity is owned by Industry Super Holdings.
MKM Capital is a privately funded non-bank lender specialising in lending to customers that have been unable to obtain a loan through their bank.
MKM’s key credit criteria when assessing an application focus on the security being offered, the borrower’s credit profile and how MKM’s products are likely to result in the borrower being in an improved financial position after the loan is advanced.
With the ability to consider low doc applications from people with defaults and court judgements on their CRAA (Credit file) and arrears on the property, MKM can help when the banks can’t.
As one of the four major banks, NAB has been a favourite for many Australians. The NAB Tailored Home Loan Variable and Fixed Rate or the NAB FlexiPlus Mortgage are all available as low doc loans.
Even though Homeside Lending and Advantedge are funded and owned by NAB it is often cheaper to obtain a Homeside Lo Doc or Advantedge Low Doc through a mortgage broker than it is get a NAB Low Doc through the branch network.
This is because NAB is more of a business focused bank rather than a consumer bank and has decided that low docs should not have the same rate discounts as full doc loans.
Owned and funded by ANZ Bank, Origin was a wholesale lender that distributed its loans through mortgage managers such as MAS. Origin’s low doc credit policies were similar to ANZ‘s, however their loan names, fees and interest rates varied between different mortgage managers.
As of 2012, Origin has sold their loan book to Columbus Capital and is no longer accepting new applications.
Pepper is a non-bank lender specialising in lending to customers who have been unable to obtain a loan through their bank.
With the ability to consider low doc applications from people with unlimited defaults and court judgements on their CRAA (Credit file), Pepper can help when the banks can’t.
Traditionally, banks tend to be very conservative when assessing low doc loans for customers with defaults even when there is a good reason for the default or the customer has a lot of equity.
Pepper is a “rate for risk” lender. The riskier they deem a loan application, the higher the interest rate that you will be charged.
Shortly after listing on the Australian Securities Exchange (ASX) in 2007, Rams ran into financial trouble. In an effort to save the company the brand was sold to Westpac in early 2008. The existing loan book was then managed by RHG Home Loans.
Rams has always been a favourite for low doc loans and now with the additional support of Westpac’s funding has released new innovative low doc home and investment loans available through Rams franchisees.
In particular, Rams has several credit guidelines which allow them to approve some types of low doc loans that other lenders cannot consider.
Their Low Docs are known as the Rams Low Doc, Low Doc Fixed and Low Doc Line Of Credit. They can be included in their Value Advantage Package which offers rates discounts for larger loans sizes.
RedZed was founded in 2006 and is a Melbourne based specialist lender which has some niche low doc products.
They are more flexible than most banks regarding the age of the borrower’s ABN, their credit history and their method of verifying a borrower’s income. However they also charge a higher interest rate and higher fees than prime lenders.
Resimac is a non-bank lender which specialises in lending to customers who do not fit the traditional bank lending criteria. Resimac offers a strong suite of low doc products for borrowers with defaults and arrears on their credit file.
During the GFC Resimac did not pull out from the market, however they were content to sit on the sidelines by reducing their new loan volumes. They are now more aggressive with their lending and we expect them to become a major provider of low doc loans in the near future.
RHG is the entity formerly known as Rams. When the brand was sold to Westpac in 2008, the remaining Rams business changed its name to RHG.
No new loans are being originated, and as such RHG exists to service its existing customers rather than to compete with the rest of the market for new loans. Because of this RHG has no low doc loans on offer.
As the fifth largest home loan lender, St. George Bank (SGB or StG) is known for a higher level of service when compared to the other large banks.
They were purchased by Westpac in 2008 which gave them access to more competitive funding, yet allowed them to keep their small bank culture.
St. George is quite different to the other banks as its own mortgage insurer St. George Insurance (SGI) has unique credit guidelines. This means they often approve low doc loans the others would decline, and in some cases decline loans that the others would approve!
St. George’s Low Doc Home Loan and Low Doc Portfolio Loan are eligible for the Professional Benefits Package but not St. George’s Advantage Package which is only available for fully verified loans. The Professional Benefits Package generally does not allow for the application fee to be waived or for full doc interest rates to be matched.
There’s now some alignment between St George, Rams and Westpac lending policies as they are all funded by Westpac. Bank of South Australia and Bank of Melbourne are brands of St. George and have the same low doc policies as St. George Bank.
Australia’s fifth largest bank behind the four majors, Suncorp is a diversified company with banking, commercial and insurance businesses.
Suncorp has always been a relatively strong low doc provider, focusing on distribution through its numerous Queensland branches and nationwide through mortgage brokers.
Several of their loans can be processed as a low doc, including their Standard Variable Rate (SVR), Back to Basics, Fixed Rate, Asset Line and Small Business loans.
Since the GFC they have been less aggressive in the low doc market. They are competitive with policy for low doc loans under 70% LVR however are more conservative with loans at 80% LVR.
The Rock Building Society
Based in Rockhampton QLD, the Rock operates through mortgage brokers across Australia. Unfortunately, The Rock was not particularly competitive with low doc loans as their management do not discount their low doc interest rates.
In 2012, The Rock discontinued their Lo Doc product range, instead choosing to focus on their customers with a fully verified income.
Westpac is one of Australia’s four major banks and was well known prior to the GFC for being a strong player in the low doc market.
With its own LMI provider Westpac Lenders Mortgage Insurance (WLMI), the bank was able to introduce its own low doc policies which were significantly different from the other banks.
Their Rocket Repay Low Doc, Premium Options Low Doc, Fixed Options Low Doc and Equity Access Low Doc can all be priced under their professional package known as the Premier Advantage Package or PAP for short.
Although their LMI is generally more expensive, Westpac was still a favourite amongst mortgage brokers due to some unique low doc policies.
After the GFC the strategy of the Westpac group changed. Westpac itself is focusing on becoming the premium brand, leaving smaller clients and difficult low doc loans to their other brands St. George and Rams. As such Westpac is not very aggressive in the low doc market at present.
Westpac is also considered by many to be one of the least flexible banks when it comes to considering exceptions to their lending policy. If a loan is outside policy then usually it is declined, even if there are strong reasons to approve the loan anyway.
Wide Bay Australia Ltd.
Widebay is a Queensland based lender and Australia’s fourth largest building society. Currently they do not offer any low doc products.