All Topics / Help Needed! / Low Documentaion loans

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  • Profile photo of goodenergygoodenergy
    Join Date: 2008
    Post Count: 16


    I was interested in getting another IP. I own one IP outright and only owe a small amount on my existing loan.
    I am currently a stay at home mum, my husband works, but isn't interested in getting an IP, so I would like to get one on my own as the current home and IP is in my name. I don't know if I would be able to get a low doc loan, I know RAMS have them. I was just wandering if anyone has any opinions as to this type of loan?Does anyone have good or bad advise on this? Please advise..

    Profile photo of harbharb
    Join Date: 2006
    Post Count: 324

    I have a Lowdoc with Rams and they WERE alright.
    Since they got in financial strife they've been putting the rates up monthly (currently over 10%) and the high exit fees just not makes it worth changing lenders. Not for a few more months yet when the exit fees drop to 1%

    Profile photo of YossarianYossarian
    Join Date: 2006
    Post Count: 136

    Do you have an income beyond the rent from the IP?

    Profile photo of Stuart WemyssStuart Wemyss
    Join Date: 2003
    Post Count: 598

    Good question Yossarian.

    Can you afford the loan without your husband's income? If not, then why would a lender be comfortable lending to a person that can't afford it. A low doc loan won't help because you need to state an income.



    Profile photo of MaxxiMaxxi
    Join Date: 2007
    Post Count: 49

    Lo Doc and especially No Doc loans are harder to get since the sub prime crisis and this will continue to get tighter. 
    With any loan you must be able to demonstrate that you are capable to support the loan required.  The broker needs to be, as duty of care', confident that you can repay the loan even if he/she doesn't need to supply full income documentation for the lender/ mortgage insurer.  Firstly, you will need an ABN to demonstrate that you are in business … I'm assuming you already have one … otherwise a Low-Doc loan might not be for you.  Lo Doc loans require an ABN for two years minimum and up to 80% lend in most cases.  No Doc loans can go up to 70% lend.  These loans are not for people to try and get around not supplying the lender with supportive documents to show affordability.  A lot will depend upon the value of the property you wish to buy and therefore the lending ratio you wish to apply for.

    You will be able to use most of the rent on both properties to show affordability, but lenders also would like to see supportive income other than rent in case you have a period with no tenants.  For this reason it might be a good idea to get a job again and build another income history to support the loans.

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