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No Doc Loans

What is a no doc loan?

A no doc loan is similar to a low doc loan in that no tax returns are required to get your loan approved.

However, unlike a low doc loan you don’t need to provide some limited form of income evidence.

Instead you’ll sign an affordability statement which confirms that you understand the amount of the repayments and that you can afford the debt.

You’ll also be required to sign an investment or business purpose declaration to prove that the loan is NCCP unregulated.

How much can I borrow with a no doc loan?

  • 65% of the property value: we can obtain a loan through larger second tier lenders at competitive interest rates.
  • 80% of the property value: only expensive short term caveat loans are available.
  • Loan term: up to 3 years interest only.
  • Residential properties: acceptable as long as the loan is NCCP unregulated (see below).
  • Commercial properties: one of our lenders will allow you to borrow up to 65% of the property value.
  • Maximum loan size: in most cases, lenders will limit their exposure to $1,000,000 per borrower.

Please call us on 1300 889 743 or fill in our free assessment form and one of our mortgage brokers will call you to discuss your options.

What are the qualifying criteria?

Although the lenders don’t require any evidence of your income, other lending criteria will still apply.

No income evidence

Unlike a low doc loan, no evidence of your income is required.

This means you don’t need tax returns, BAS statements, an accountant’s letter or bank account statements to verify your income.

Please be aware that some lenders will still ask you to sign a statement of your assets and liabilities or a declaration that confirms that you can afford the loan. If they ask you to sign a declaration then it will not ask you to confirm your income, just that you can afford the repayments.

Loan purpose

Your loan must be NCCP unregulated. This means that your loan must meet one of the below criteria:

  • Your loan must be for business purposes, or
  • Your loan must be secured by a commercial property, or
  • Your loan must be for investment purposes (other than in residential property), or
  • Your loan must be in the name of a company or trust with an ABN.

If your loan doesn’t fit into at least one of the above conditions then it will be declined by all no doc lenders.

This is because the National Consumer Credit Protection (NCCP) Act covers all loans with a purpose that is personal, owner occupied or for investment in residential property. Under the Act, the lender is breaking the law if they don’t verify your income. This is why all no doc loans must be NCCP unregulated.

Security

The security for the loan is all that the lender is relying upon. For this reason, the lender is very particular about the property that they’re taking as security.

As a general rule the property must be:

  • In a good location.
  • In good condition.
  • Larger than 50m2 for a unit or under 2 hectares for land.
  • Readily saleable.
  • Residential properties, offices, factories, warehouses and retail may be acceptable for a commercial no doc.

Credit history

Whilst some no doc lenders will approve a loan for someone with an impaired credit history, this isn’t the case for all lenders.

If you have a problem with your credit history then you’ll almost certainly pay a higher interest rate.

Exit strategy

No doc loans aren’t normally designed to be for a long period of time. In most cases, they have a term of 6 months or 3 years and then their interest rate will increase.

Lenders want to know how you plan to repay the loan. In most cases, the borrower plans to sell the property or another asset to repay the loan.

Do you need help to apply for a no doc loan? Please call us on 1300 889 743 or complete our free assessment form and one of our mortgage brokers will call you to discuss your options.

How can I get a no doc loan?

Our expert brokers can help you obtain competitive no doc loans through our panel of lenders and can also arrange a private loan if you can’t obtain a loan any other way.

Please give us a call on 1300 889 743 or complete our free assessment form and we’ll find the right lender for you!

Do the major banks offer no doc loans?

The four major banks don’t offer no doc loans however some smaller lenders and non-bank lenders have competitive no doc offers.

Lenders Mortgage Insurance (LMI) isn’t available for no doc loans so lenders usually charge a 1% to 2% application fee to cover their risk as well as processing costs.

Some lenders will require proof that you have a registered ABN, however most won’t have a policy specifying how long it needs to be registered for. Other lenders will check your credit history. Because these lenders are approving lower risk loans, their interest rates are cheaper than those of private lenders.

However, you can still expect to pay more for a no doc loan than you would for a low doc or fully verified loan.

Can I get a private no doc loan?

There are several hundred private lenders that fund no doc loans. The lenders are diverse, ranging from individuals with large sums of money to mortgage funds and even institutional investors.

Most of them operate through a specialist mortgage broker or non-bank lender that matches borrowers with lenders for a fee from the customer. Your mortgage broker will charge you a fee to arrange your loan because most private lenders don’t pay them any commissions.

Private lenders are far more expensive than the major lenders in Australia. You can expect the interest rate to be anything from 2% to 6% per month! That’s up to 72% per annum!

Lenders will usually require that a valuation be paid for up front and that you establish how you’ll repay the loan, either from the sale of a property or by refinancing to a prime lender.

Private no docs aren’t normally designed to be long term loans but are instead used for one to six months.

The advantage of private no docs are that they can be funded in as little as 72 hours, they don’t require a credit check or other loan assessment and can sit behind your bank loan as a second mortgage or caveat.

In other words, if you have a large mortgage and only need an extra $30,000 you often don’t need to refinance the entire loan to a higher rate but can instead just pay the higher rate on the extra amount you are borrowing.

If you’re considering obtaining a private no doc loan we strongly recommend that you use it only as a last resort and that you obtain legal and financial advice before signing the private loan agreement. Unfortunately not all private lenders are reputable, please be careful who you do business with.

What investment purposes are unregulated?

If your loan is for investment purposes then it is not regulated by the NCCP act. The exception is if your loan is to buy or refinance a residential investment property loan.

So which investment or business purposes are considered to be unregulated?

  • Purchasing shares.
  • Starting a business.
  • Buying a commercial investment property.
  • Refinancing a margin loan.

What are the interest rates?

The type of lender that you use, the nature of your security property and your credit history will determine the interest rate that you will pay.

In other words, no doc loans are a “rate for risk” type product. The higher the risk you are to the lender, the more expensive your loan will be.

In most cases, low doc loans range from 7% p.a. to 11% p.a. depending on the percentage of the property value that you’re borrowing and your credit history.

If you’re looking for a short term caveat loan then you can expect to pay 24% – 76% p.a. In most cases this type of caveat lending does not benefit the borrower and so we’ll not help you to apply for a loan like this except in exceptional circumstances.

Why do they call it an 'asset lend'?

No docs are often called asset lends because the lender is relying almost entirely on the value of your property being higher than the amount of your loan. They aren’t looking at your income or other indicators that can help them decide if your loan should be approved or not.

Only private no doc loans are true asset lends. The second tier lenders still do some form of credit assessment when approving your loan.

  • Kylie

    Hi, I am a self-employed beautician and am planing to invest in a property in South Sydney. However, I don’t have the required docs, can someone explain what are my chances and how much will I be able to borrow?

  • Hi Kylie,

    Usually, most lenders ask for 2 years financials and tax returns from a self employed applicant. However, there are only a handful of lenders who can still help. They normally ask for a combination or sometimes only one of these documents: One year’s tax returns, Business Activity Statement, Transaction Statements and/or Accountant’s Declaration. Depending on all other factors you might be eligible to borrow up to 90% of the property value.

  • Michelle BowenPsychic

    I am seeking in essence bridging finance as I have contracted to purchase a property. I need more time to resolve my affairs and sell my home. I would be seeking a short term loan of 12 months with a single repayment upon sale of my house

  • Hi Michelle,

    A bridging loan is likely a better option than a no doc loan in your case. There are bridging loans where your borrowing capacity is assessed on the final debt (i.e. after you sell your home). If there isn’t any final debt then you don’t need an income to get approved.

  • Ralph B

    I have 5 investment properties but because I only work 23 hours a week, I was told by two brokers that I can’t get any more loans due to my serviceability. Can I get a no doc loan?

  • Hey Ralph,

    The question is, can you afford to make the repayments on your new property? If you can afford it then we usually have a lender that can help, one that has better borrowing power for investors. If you can’t afford it then it’s best to increase your hours so you can continue playing monopoly! If that isn’t an option then consider just waiting.

  • D. Monica

    Hi, I own a home in Sydney and I want to cash out to buy some shares. Is a no doc loan cheaper than a margin loan?

  • Hi there, if you’re borrowing less than 65% of the property value then a no doc loan should be cheaper. FYI, if you’re working and you can prove your income then we can get a full doc loan instead. But based on your loan purpose, you would qualify for a no doc loan.

  • Brienne

    We own our home outright and want to refinance and consolidate debts on an investment property. Since we’re self employed, we’re looking for no doc loan or low doc loan options. The loan is probably $400K on my property, which is valued at around $850K.

  • Hey Brienne,

    You’ve got lots of equity so that’s a good start. We could consider a no doc loan if the debts you’re consolidating are business debts. If not then there are many ways to prove your self employed income using limited verification (low doc) that we should be able to work something out. Some lenders will accept BAS, an accountant’s letter or bank statements. If the income is there we can usually find a way to prove it.

  • S. Cones

    Hi, I started a business 8 months ago and I have a great turnover but I can’t show my profits until we get a tax return. I want to draw cash from my home to expand my business with advertising so can you guys help with this?

  • Hello S. Cones,

    Yes, we can help with this. If you don’t have a home loan then we can easily do this with a no doc loan. We’d want to have a talk to you about your plans and it all has to make sense, we still practice responsible lending even if the loan is a no doc loan.

    If you already have a home loan on the property then the new loan must be more than 50% for business purposes. E.g. if we refinanced your home loan for $250,000 and the new business loan was only $50,000 then this is a regulated loan so can’t be a no doc (but could be a low doc!). However, if the business loan was $300,000 then the loan would be predominately for business purposes and a no doc loan would be fine. Hope that helps.

  • Ryan Hunter

    I have started a construction business a year ago, cannot prove income because checks have been signed over to someone elzes account, I do not have a co-signer, I do not own my own home, and vehicle is not in my name. Is it even fathemable to get a small loan to help living assets? Please help.

  • Hi Ryan. If the ABN is in your name you may be able to get a small business credit card up to $10k with no income evidence. Talk to your bank about this.

    I’d recommend that you have your income paid into your account from now on. When things don’t look normal banks tend not to assist.