Master Builders Financial Services Manager Harry Pontikis helps you understand what a low document (low doc) home loan is and how it might suit you.

A mortgage created for the self-employed

If you’re self-employed, you may have found it difficult to get a traditional mortgage. Don’t despair. The low doc home loan has been designed specifically for the self-employed.

The dilemma of the self-employed

If you’re self-employed, the goal of your accountant is to minimise your taxable income. Unfortunately, while this means you pay less tax, it creates problems when you try to borrow. While you might know that you can service a loan, your books don’t back you up, or your paperwork may not be up-to-date. As a consequence, the self-employed often find it frustrating to obtain loans.

Consider low doc loans

While the self-employed often can’t satisfy traditional lending criteria, they can be perfectly capable of servicing a loan. As a consequence, the low doc loan was born. Low doc loans don’t require the same level of “documentation” as normal loans. If you have difficulty documenting your financial position with regular pay slips, tax returns or business financials, a low doc mortgage could be a good solution.

They may require a higher contribution from you (i.e. savings or equity) towards the transaction and they may have slightly higher interest rates, to offset the perceived higher risk to the lenders.  Neither of these factors are significant enough to offset the advantage of achieving the purchase of your property or refinancing your existing one.

Be careful

Low doc loans are available through credit advisers, banks and non-bank lenders. Make sure with low doc loans, only borrow through someone you can trust. You may not have the same level of protection if you borrow in a company name or undertake the loan in ways which exclude you from various acts of legislation designed to protect the consumers – like the National Consumer Protection Act.  This makes it imperative you do not speak to a bank directly and only speak with a known and reputable credit adviser who is an expert in your industry as well as the finance industry – like Master Builders Financial Services.

To discuss your own situation, contact Master Builders Financial Services on (03) 9411 4555.

Chocolate Money t/a Master Builders Financial Services. Australian Credit License # 387277.

NB: this information is not to be considered specific advice as your situation has not been taken into consideration.