Self-employed individuals often face unique challenges when it comes to securing a home loan. One of the most common challenges is the lack of traditional documentation that is required by lenders to prove their income.
However, there is a solution to this issue: low doc home loans. In this blog, we will take a deep dive into what low doc loans are and how they can benefit self-employed borrowers.
Whether you’re a freelancer, consultant, or running your own business, you’ll come away with a comprehensive understanding of what loans for self employed are. We’ll also discuss how they work and what to look for when comparing different options for low doc loans.
What is a low doc loan?
Low doc home loans, a.k.a. self employed home loans, are a type of home loan where the borrower is not required to provide as much documentation to prove their income.
This type of loan is typically used by self-employed borrowers or small business owners. They typically do not have the same level of income documentation as a salaried employee.
Low doc loans Australia: How it works
When applying for self employed home loans Sunshine Coast borrowers must be aware of the higher interest rates and bigger deposit requirements that come with them.
How much can I borrow?
The amount you can borrow for a low doc home loan in Australia will depend on several factors, including your income and financial situation, the lender’s requirements, and the value of the property you’re purchasing. However, you may borrow up to:
- 60% of the purchase price without paying for Lenders Mortgage Insurance
- 80% of the purchase price with competitive interest rates (might comply with risk fee and LMI)
- 90% of the purchase price with much higher interest rates plus LMI costs
How do I qualify for a low doc home loan?
To qualify, you must:
- Be self-employed, a contractor, or someone who is unable to provide traditional proof of income
- Have stable and adequate income
- Have a good credit score
- Have a good asset to income ratio (ideally 2:1)
- Have a low debt-to-income ratio
- Have a solid 3-month history of regular and consistent deposits
- Have unfalsified documents like income declaration, etc
- Present deposit of at least 20% of the purchase price
- Intend to buy a property with high market values
What are the requirements?
- Proof of identity like valid government-issued IDs i.e., a passport or driver’s license
- Proof of income like statements from banks or other financial institutions, ABN that has been GST registered for two years, tax returns, or an accountant’s letter verifying your self-employed income
- Credit history review so lenders may get an understanding of how you manage your finances, assess the risk involved in approving the loan, and determine what interest rate they will offer you.
- Assets and liabilities statement that can be used to back up the loan application. This includes bank accounts, vehicles, investments, property, and more.
- Finance application form with personal information such as name, address, phone number, age, employment status etc.
- Property appraisal to make sure the property meets their standards before granting the loan.
Need help shopping for low doc home loans?
Applying for a self employment home loan can be tough, but understanding the process involved can put you in a better position to secure one.
At Sunshine Coast Financial Solutions, we understand the challenges of breaking into the Sunshine Coast real estate market as a self-employed individual. We work with a range of lenders who offer competitive low doc home loans, so we can help you find the right solution for your needs.
If you’re ready to take the next step, our team of home loan brokers is here to help. Give us a call today at (07) 5437 9073 or click the button below to fill out our online form. One of our experts will get in touch with you shortly.
Meet Chris Wilson, the heart of Sunshine Coast Financial Solutions (SCFS). With over a decade of experience in finance, Chris started his journey as a broker with Aussie Home Loans in 2009. His dedication earned him the title of Rookie of the Year in 2010. By 2011, he was ready to build a business based on trust and strong partnerships.
