NODOC + LODOC ???

Paula,

A LODOC loan is one where you don’t need to provide any income paperwork to the bank. Just sign a statement declaring what your income is each year. Sometimes they want your accountant to sign it. It was designed for self employed people who have not done their tax. Usually a max LVR of 80%

A NODOC is one step easier. You just sign a statement declaring you can afford the loan. No income or employment is even mentioned. Suits those on poensions or other unusual incomes. Usually a max of 60-70% LVR.

Does this answer your question?

Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Also referred to as lite doc or easy doc, they refer to the application paperwork. Even still, it’s not exactly reduced much !

Another main difference worth noting, is lo-doc loans are offered by most banks and lenders in one form or another now. Banks and lenders securitise their loan books with these sorts of loans, which requires mortgage insurance. The borrower may be liable to pay the premium, even if borrowing only 80%, however it is a far reduced premium to that lower-deposit borrowers (90-95% lends) would experience, with the premiums only being 0-48-.6% on average (plus your state’s stamp duty)

Some lenders carry the cost internally, but most will ask the borrower to pay it when borrowing between 60-80%. Also, lo-doc loans can even go as high as 90% with some lenders, but as you can imagine with the increased risk, so are the fees and rates.

Lo-docs can be dangerous, as the fall back of your disclosed income (albeit unverified) can become a skeleton that may one day come back and bite you, the Fin Review have run 2 articles in the past 3 months (if anyone would like a copy, let me know, I have it… somewhere) about the ATO and their attack on lo-doc borrowers. As you can imagine, when a borrower is stating one thing to a lender then declaring a drastically different figure to the ATO, they get interested.

So, the only advice I can give and Im sure the other brokers in here would agree, wherever possible, take the option of a no-doc loan over a lo-doc, as you can rest easy knowing that you will never have to justify figures you didnt declare in the first place!

Hope this helps.

Regards,
Rob

Rob Whyte
Certified Mortgage Consultant MIAA

Principal & Licensee
The Mortgage Gallery
e [email protected]

Winner 2004 National Office of the Year!

Accredited with over 27 lenders nationally. 15 years experience in commercial and residential lending, ask me anything, if I dont know, I’ll find out!