With fewer lenders offering low doc home loans on the market, are there solutions for self-employed borrowers currently on a low doc loan paying a high interest rate?
However, if you are not qualified for a full doc mortgage, we are still able to find you a lender that can refinance your low doc loan.
How do I qualify?
- Self-employed for at least two years, however some lenders can consider self-employed with one year ABN and tax return.
- Ideally, you should have 80% equity in your property, however some lenders can consider refinancing up to 95% of the property value (conditions apply).
- You can refinance on a fixed rate if you find that you’re likely to recoup the cost of early exit fee within the first two years of refinancing.
Find out if you’re in a position to refinance from low doc to full doc by calling 1300 889 743 or by completing our online enquiry form.
Get a cheaper rate by switching from low doc to full doc
Lenders see low doc loans as a higher risk because you are providing limited evidence to prove your financial situation.
So while there are lenders that can help, they charge higher interest rates because of the risk they are taking on board.
However, if you are able to provide full income evidence this would represent a lower risk which means you can qualify with more lenders at a much cheaper rate and have access to more products.
What documents do you need to provide for a full doc loan?
- Your last two years’ financial statements (profit and loss and balance sheet).
- Your last two years’ business tax returns.
- Your last two years’ personal tax returns.
- Your last two years’ notices of assessment.
- Your 6 months home loan statements.
Do you have less than 2 years ABN or need assistance to obtain income documents from your accountant?
Please speak to us today on 1300 889 743 or complete our free assessment form today.
FAQs
How can I improve my chances at approval for full doc?
- You should have a clear credit history.
- You should have 6 months clear mortgage repayment history.
- You should be spending within your means as this can affect your overall borrowing power.
Can I access equity?
Yes, you can!
The majority of lenders have no restrictions on cash out under 80% of the property value or 80% LVR.
A select few can even lend up to 95% for refinance and cash out (conditions apply).
Can I consolidate debt?
Some lenders allow you to consolidate up to five unsecured debts as long as the total Loan to Value Ratio (LVR) does not exceed 80%.
Unsecured debts include credit cards, personal loans and car loans.
However, if you have more than five debts to consolidate, and the LVR is more than likely to be over 80%, please speak to one of our specialists today to find a solution.
Can I refinance business debt?
We have lenders that can refinance business debt up to $1 million.
What are the costs of refinancing?
Home loan refinancing costs vary from lender to lender and also depend on your overall situation and the product you’re applying for.
These costs include:
- Discharge fees: Your existing lender will generally charge around $150 to $300 to release you from the mortgage.
- Application fees: There are no upfront costs with some mortgage products.
- Property valuation fee: This fee is paid to a professional to value your property to ensure that it is an acceptable security that meets the bank’s lending policies.
- Lenders Mortgage Insurance (LMI): Typically only charged if your refinance comes in at over 80% of the property value.
- Ongoing fees: These costs include monthly or annual account-keeping fees and redraw fees.
- Break costs: Charged if you refinance within a fixed term.
Case study
David is self-employed and has been running a plumbing business since 2015.
Two years ago he wanted to purchase a property to live in.
At the time, his ABN was only registered for one year and he didn’t have his financials ready so he applied for a low doc loan.
He borrowed $500,000 to purchase a property valued at $625,000 at an interest rate of 4.9% per annum making principal and interest (P&I) repayments. He was paying $2,654 per month.
Having made perfect repayments over the past two years and built a successful business, David wanted to refinance and take some equity out to upgrade his car.
He could now provide two years worth of financials to apply for a full doc mortgage at a much sharper rate.
His current loan balance was $486,000 and his property value was $680,000, bringing his Loan to Value (LVR) to around 70%.
Cashing out $58,000 to purchase a new car, this brought his total LVR to 80%.
He approached his mortgage broker who was able to get him approved for a full doc loan.
David was able to provide two years tax returns for the company and personal plus two years Notice of Assessment.
His broker found a lender offering an interest rate of 3.69%.
After refinancing, his monthly repayments reduced to $2,501, saving him more than $150 per month or $1,800 per year.
If you are thinking about switching from low doc to full to get a sharper rate, please contact us today on 1300 889 743 or fill in our online enquiry form today.
