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Low doc home loans (aka lo doc loans) are often sold to self-employed people as the best option for them to get a home loan. However, there are other home loan options for self-employed people that could be a better option.
Low doc home loans are often promoted by some lenders because:
Some bank sales staff and brokers promote low doc home loans because:
A low doc home loan can be the best option when you are unable to supply the required paperwork to demonstrate your income to the lender. In this case the lender will not accept a full doc application as you don’t meet the requirements.
Other scenarios can be where your business financials not reflecting the full story of your income or your business shows fluctuating annual income.
With a low doc loan you can declare what your income is by completing an income declaration form. This may help you to be able to borrow at a time of the financial year where you haven’t completed all your financial statements. Low doc loans can also be a good option for those that have only been self-employed for a short time.
PAYG employee’s income is easier to assess than self-employed people’s income. PAYG employees’ incomes are generally based on a set salary amount, with commissions, overtime, and allowances. This can be demonstrated by payslips.
Self-employed people have more complicated financial situations. The lender will assess their income from profit and loss statements. Often the documentation can be up to 2 years old at the time of the loan application. Furthermore, the profitability of the business could have changed from the time of the documented income.
Low doc home loans
As a self-employed person, where you are unable to qualify for a full doc home loan or your income documentation does not reflect your income it may be better to apply for a low doc home loan. Find out more about low doc home loans here:
Low doc business loans
As a business owner or self-employed person, it can sometimes be difficult to get the required documentation to prove your business income? Find out about low doc business loans for when you don’t have the required income documentation for a full doc business loan.
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