If you consider the opinion of financial experts, they will encourage you to take home loans even after having enough funds to avail yourself of numerous benefits, including tax saving or maintaining liquidity. However, though availing of a home loan is nothing difficult, it's a matter of concern for self-employed people who don't work regularly. Moreover, who doesn't know that the borrower needs to showcase their financial statements to get loan approval, which is impossible for many individuals? Therefore, this article will give you a comprehensive idea of the alternative way of traditional home loans, i.e., low doc building loans.
What Do You Mean By Low Doc Building Loan?
A low doc building loan is a flexible mortgage solution that can be availed through less paperwork when compared to a regular home loan. Under this lending system, the borrower has to submit a self-declaration document for income evidence. There's no need to provide any payslips or tax return proofs. Here is the significance of taking the low documentation loan! It's the responsibility of the lender to verify the credit scoring of the borrower along with checking whether he can repay the loan on time. Besides, the person needs to submit his latest bank statements and an authorized letter of an account to get the lending process sanctioned.
Earlier, it was much easier to get homeownership using a low doc building loan, i.e., low documentation home loan. However, as soon as the Global Financial Crisis emerged in 2009, there was a noticeable change in the rules and regulations for the overall lending system. As a result, the lending requisites became so rigid that they make it unobtainable for most people searching for substitutes for regular home loans.
For Whom A Low Doc Building Loan Is Of Great Help?
Although this loan is offered to those who can't provide ample documentation, there's more possibility of getting the loan with a standard rate of interest on showing enough proof of financial statements. This particular home loan is a great help for individuals who face numerous financial constraints. This includes:
Freelancers
Small business owners
Persons who don't work regularly
Seasonal contractors
Any self-employed professionals
People with low credit score
Proprietors
Individuals who need alternate documentation to the regular one or people who recently shifted to a new country
What Documents Need To Provide For Applying For A Low Doc Building Loan?
Be prepared for facing enough inquiries from lenders to get comprehensive details of your financial status. They will also verify your declared information for checking your affordability to repay the loan. Besides legitimate inquiry, you need to showcase a few documents to the lender for completing the loan application process. Ensure providing documents as much as possible to get the loan approved without any hassle. A low doc building loan application needs the following documents:
Business Activity Statement of last 12 months
A self-attested income statement containing your earnings
An authorized letter from an accountant approving your income details
Bank statement of last six months
Registered name and number of your business (Australian Business Number)
Conclusion
According to the various situations of lenders, who want to apply for a low doc home loan, the criteria are different! The major drawback of accessing a low doc home loan is that it applies much more restrictions on eligibility and requirements than standard bank loans, including a higher interest rate, the inability to borrow less than 80% of the property value, and many more. If you are looking for a home loan, first go through the eligibility criteria and then apply. If needed, you can take the help of an experienced broker well-versed with low documentation loans. Let's make your property buying experience a memorable one!