Low Doc Home Loans

Low doc mortgages in mortgage broker speak are “specialist” loans. This means that we have a client who, for some reason, doesn’t have all the documentation (tax returns, etc.) available to lodge an application, but requires the funding prior to the documentation being ready and is prepared to accept a higher interest rate and potentially less favourable terms to secure the property.

 

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Brodie Brown

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Understanding Low-Doc Home Loan Options in Perth

Low-doc home loans are specialist mortgage products designed for borrowers who cannot provide standard documentation at the time of application. These loans are characterised by:

  • Higher interest rates compared to traditional home loans
  • Potentially less favourable lending terms
  • Acceptance of alternative documentation such as Business Activity Statements
  • Availability through specialist and non-bank lenders rather than major banks

Common Scenarios for Low-Doc Mortgage Applications

Typical scenarios where low-doc home loans may be suitable include:

  • Self-employed applicants with outstanding tax bills: Business owners who have tax obligations but need to secure property financing before finalising their tax returns
  • Business owners delaying tax payments: Entrepreneurs with large profits who wish to defer tax payment whilst showing solid performance through Business Activity Statements
  • New business ventures: Recently established businesses experiencing strong growth and motivated to purchase real estate with urgency

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Who Qualifies for Specialist Low-Doc Lending?

It’s important to understand that low-doc loans are not an opportunity to borrow money if your finances are in disarray or your business is declining. These products work best for borrowers who:

  • Have most of their financials in decent order
  • Can demonstrate business performance is going well
  • Are recovering from financial challenges and can show the latest 6 months of trading history
  • Need to consolidate tax debt whilst maintaining business momentum

Remember: If your business is going backwards, focus on generating revenue first before pursuing property finance.

Available Lenders for Low-Doc Home Loans

These types of loans aren’t typically available from major banks. Instead, a small number of non-bank lenders and specialist lenders offer surprisingly competitive terms and interest rates to the right type of customers.

Working with an experienced mortgage broker who understands the specialist lending landscape is essential to accessing these products and securing favourable terms.

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Requirements and Documentation for Low-Doc Applications

Whilst low-doc loans require less documentation than traditional mortgages, lenders still need evidence of your financial position. Alternative documentation may include:

  • Business Activity Statements (BAS) showing recent trading performance
  • Bank statements demonstrating cash flow
  • Accountant’s declarations
  • Recent profit and loss statements

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How to Get Started with a Low-Doc Home Loan Application

Remember:

If variable rates increase, you may pay more interest than if you fix your rate. It will depend on the size of the increase(s), how far into the term the increase(s) occur, and how long you hold the loan after the increase(s) occur.

If variable rates stay flat or decrease, you will pay less interest than if you fix your rate. This is on the basis that your fixed rate is higher than the variable rate over the same period.

Rate Lock

Some lenders will provide you with the option of locking in the fixed rate prior to settlement occurring. This is referred to as “Rate Lock” and will involve paying a rate lock fee which will usually be calculated as a percentage of the loan amount.

This fee can be a significant amount, although some lenders will not charge a fee or may waive it.

Next Steps:

The smartest thing you can do is to send an enquiry with plenty of detail about your situation. If it sounds like something we can assist with, we will organise an appointment to speak with you.

Contact BH Brown Mortgage Brokers in Fremantle to discuss your low-doc home loan options across Perth’s Western Suburbs.

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Brodie Brown

As featured in:

west magazine
the-adviser