Hello
I have seen on various posts that people have been advised to get an ABN to facilitate getting some loans.
Can someone please explain why this makes a difference. I mean just having a number without having a business is no guarantee of reliability is it. What am I missing?
Or am I totally confused here.
A very happy, healthy and naturally wealthy 2007 to you all. [party]
Elka
True, but if you have an ABN to quote you can get a lodoc loan without having to prove your income. The theorie behind that is that self employed people often cannot produce good financials. However I believe there is a two year waiting period applicable.
Thank you bridgebuff.
Smoke and mirrors in other words. [smiling]
As Bridgebuff points out, generally ABN’s are required to be eligible for a lo-doc loan.
There are instances however when this does not apply, there are lo-docs available for PAYG employees (therefore an ABN is not required) and there are also a number of lo-docs where an ABN isn’t required, or isn’t checked. Westpac i believe doesn’t check ABN’s during a lo-doc application.
Lo-docs used to be very inflexible, 80% LVR and 2 years minimum self employment but with a reasonable percentage of borrowers now taking this route they have become increasingly more flexible. There are loans available to 95% and those self employed for 1 day (well have an ABN for one day anyway….). In fact there are a couple of products that will allow 95% LVR with 1 day registered ABN. Obviously interest rates are higher than full doc loans in this instance but they can be useful to some.
On lower LVR’s (around 80%) the interest rate is usually comparable to the standard variable rate of the same lender, maybe just atouch higher but they are certainly competitive.
Jamie
Silly really isn’t it. But most low docs are only available for self employed. One way of proving self employment is having an ABN, hence most lenders ask for the ABN number so they can check on how long the person has been self employed.
Terryw
Discover Home Loans
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Well that makes a little more sense Terry.
I have a DT with company trustee which I control. The DT has had an ABN for many years. If I wished to take out a loan for a property which I wanted to be owned by another DT (or HDT) but with the same trustee company would I be able to use this ABN?
Thanks
ElkaHi Elka, yes, sounds like you are self employed!
Terryw
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In my case I have just started a family trust for investment purposes. But because I am the guarantor on the loan, my ABN (which is seven years old is good enough.
Its funny how people interpret by going for a Low Doc its a license to take what you want. With a Low Doc you still have to sign a Stat Dec to say your income, however do not need to provide evidence of this.
This clears the lender of responsibility, as the person applying has signed a stat dec, of course if worse comes to worse and you cannot meet your repayments and are then found out to have declared false information?? I let your imagination take you from here.
As for the loans for ABN for 1 day they usually also require an LVR of 60% therefore there is a fair amount of equity and it is the borrowers risk.
Wayne Skewes
Mortgage Broker
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Refinace, Loan Consolidation, Owner Occupied or Investment Finance. Free Service I come to you!Hello Terry
The trust is just owner of a commercial property. It’s not used for business as such …. except of collecting the rent of cause. [smiling]
Excellent point wanelad. Good to be reminded.
Elka
I appreciate your comment wayne. According to my broker I do not have to declare my income, but so far I did not need a lodoc yet. It will be interesting.
Yes, Low Docs are dangerous. One of my clients has already got into trouble with the child support agency about overstating his income.
Wayne, a lot of the Lo Doc loans don’t require an ABN or just an ABN for one day, 70% LVRs.
Terryw
Discover Home Loans
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Also RAMS currently have an 85% LVR Low Doc loan with no ABN required – but still have to have been self employed for 2 years.
Terryw
Discover Home Loans
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If you have an ABN relating to one entity many lenders will still provide you with lodoc financing in another entity even though the ABN for that entity has only been registered for a day or so.
Also don’t let anyone tell you that you need to pay a higher rate for a lodoc style loan. Most quality deals can be done at lower than standard variable rate.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
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Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
hi guys – pays to be in the know – what about if you have been self employed for while – 2 years – but the employment and entity is in NZ as is mine.
What type of lvr, and rate could I expect purely on an income declaration basis for
a) established residential
b) finance to buildjust to clarify I am after AUD to buy/build in Australia in an australian entity which would be brand new.
cheershttp://www.cashflowproperties.co.nz
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
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