What Do You Mean By Low Doc Home Loans And How Is It Processed

By Author: Cody Kinchela
Total Articles: 22
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One of the recent development in Australia's mortgage industry is the low doc home loans in Melbourne and throughout the country. In this kind of mortgaging process, the borrower gives a self-declaration of his income during the application. This is done because the borrower does not have any payslip or tax return to be provided while submitting the application. Low doc home loans are specifically beneficial to entrepreneur and to those having an irregular income on a yearly or monthly basis. It is also beneficial to the people who are not updated with their financial transactions at the time of loan application. These are known as high-value mortgage loans and constitute around 5% of the entire loan market in Australia. The intensity of the loan has grown greatly over the past few years.



Initially, the low doc loans were given out by non-banking institutions to the borrowers with unimpressive credit histories. However mainstream lenders like banking organisations would look forward to clean credit history and a generous deposit before giving away any kind of ...
... loan. But with the increase in the low doc loans, even banking institutions are working on providing mortgage to people devoid of any payslip or tax return. A low doc loan can bear interest as low as 5% which was really high previously and was out of the reach of small business owners and individuals. The interest rate varies depending on the loan amount, time of payment and other securities.



With years of existence, the limits have also increased for the low doc home loans in Melbourne. This has been made possible because the loan size has also increased throughout the years. Recent studies have projected that the low doc loans have increased by around 30% than the traditional lending capacity.



There is an increase of 15% in the low doc loans as compared to the conventional loan that is a tad lower at 12%.



People having their own business, have greater income from commissions, huge investment and cash incomes may not be willing to disclose their annual income while borrowing the loan and even maintain their privacy. People applying for low doc home loan are well aware that they have to pay a price for this privilege and they are willing to do so to maintain their financial privacy. Depending on the requirement of the borrowers and the paper they are willing to show the flexibility is given.



The borrowers have to give some specific documents for sure for the entire process to take place. Clean credit history is a must for anyone willing to apply for a low doc home loan. Apart from the clean credit history, they also have to give a larger deposit which is 30% to 40% higher than the normal interest.



Some of the people who can be considered for a low doc mortgage include:

Self-employed people who don't have updated financial documentation presently

People with complex asset and income structures who don't have a payslip

Retired individual living through investments only

People in a turmoil because of divorce, death or career change.

The low doc home loans have made it possible for people to have the dream house irrespective of their financial documentation. This has also helped the people who are in no position to disclose their financial stability that is a must for conventional loans. People no longer have to sale off their asset for closing the loan as they are open to a flexible option depending on the situation. To know more about the process it is better to have a talk with the expert lender who will understand your situation and offer you the best possible option.

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.