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3 Ways To Obtain Low Doc Home Loan For Your Rural Property

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By Author: Cody Kinchela
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In the light of recent events, the popularity of low doc home loans in Melbourne has skyrocketed. So, what is this credit feature? Also known as low documentation loan, this is a specialised advances. These are designed for SME (small & medium sized enterprise) and MSME (micro, small & medium sized enterprise) owners or any other self-employed individuals to apply for a housing loan without the hassle of too much documentation (like, tax returns).

So, what’s the catch, right?

Well, there are a few to start with. Some of them include –

This credit facility is usually disbursed with higher rate of interest as the lending institutions do not much documents (rather, leverage) to fall back to – so there is higher risk in such advances
Most lenders do not prefer to approve sum over properties exceeding 10 hectares (25 acres)
The amount of low doc home loans in Melbourne depends (usually) on the size of the land you are considering to purchase
Lending institutions also feel reluctant to finance commercial properties

Only a handful of lenders finance them (up to 60% of the LTV of the property). Now that you know the basics of it, it is time to secure it.

How to obtain such credit facility?

While on one hand, there are a few limitations on getting a low documentation home loan on your rural property, it is not certainly impossible. Although, different lenders possess different eligibility criteria, it is not hard to pinpoint a few common factors to start off.

Those are:

Possess a clear credit history (a credit score of 650 or above is advantageous)
Has a stable repayment history (both for old and existing advances)
Possess an Australian Business Number (ABN)
Has BAS statements in custody to show evidence of your income (also, bank statements)

There are other aspects as well. Those considerations include:

A specific kind of advance (here, low doc home loans Melbourne) that you require
Should not be black-listed by any credit bureau
Should be registered with Goods ad Service Tax
The rate of interest will depend on the percentage of down payment you’re likely to draw
The quality of the mortgaged property (like, is it well located? Does it have good resale value in case you default and the have to recover the outstanding amount)

How does the lending institutions assess?

A lending institution in Melbourne or other Australian cities are most likely to assess on the following aspects. Keep these factors in mind –

Purpose – Whether the property is ideal for investment purposes or for personal use.
Zoning – Most likely, a lender will consider factors like farm-use, commercial or industrial and if that property attracts GST, then it’s a BIG yes.
Access – Is the mortgaged land well connected by road, electricity and has no legal hurdles (old or existing). Remember; too much remote properties do not attract the attention of the lenders.
Property – Although there is no as such cap on the area of land (yet, an unofficial area of 25 acres still prevails.
Services – What are the amenities prevalent in the area? Are the sewage lines and water source maintained properly?

The lenders will look into these matters when you apply for low doc home loans in Melbourne or other Australian cities. By now you are quite acquainted with this tailor-made credit facility and the importance of displaying your repayment capability. As long as the mortgaged property is “credit-worthy” and you have the means to repay the EMIs on time – everything will fall into place!

About the Author: This contribution has been made by Cody Kinchela who has written a number of articles on Low Doc Home Loans Melbourne and provides fruitful information.

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