Lo/low doc loans

Hi there

It's a very vague question which no one will be able to answer without some more info.

Cheers

Jamie

can your prove your income? Are you willing to show 12 months BAS statements and trading accounts and do these reflect the income you will declare?

Hi Richard, i never said it was a legal requirement. I was just stating the general rules with most of the majors at the moment. Even as you said your declared income is under 75K you dont need to be registered for GST a lot of lenders will still have that as their requirement.

In addition to the options mentioned above have been having success recently using 6 months business banking statements rather than bas returns for low doc clients. The annualised income from the last 6 months will need to reflect what you declare. As stated not a lot of info to work on here. Rate is better than most lenders standard variable at the moment. Some consolidation when refinancing acceptable.

Hi All,

This might be a silly question – but do the BAS returns have to show profit? i.e.: if all the quarterly BAS returns for 2 recent years show consistent losses, would the lenders qualify (provided of course the borrower sign the stat dec to say that he can repay).

Hi (again).

And what do lenders particularly look for in the BAS returns? – the turnover income or the profit/loss figure for serviceability?

Hi Jenny

No silly thing is that some lenders work off a percentage of Gross Turnover as shown on your BAS and only require your last 2 statements.

In some cases we can annualise the income based on a 6 months BAS and then apply a turnover calculation.

Bottom line is you should never commit to something where you cannot clearly meet the repayments..

Cheers

Yours in Finance 

Thanks, Everyone.

The BAS statements don't really reveal whether the borrower is a trustee or a guarantor. Do lenders take into account of the borrower who happens to also be a guarantor or a borrowing trustee of another entity (let say a company or family trust) when they assess Lo Doc?  Would the answer be the same as for standard loan?

I mean generally people only borrow when they believe or are confident that they will be able to pay it back (comfortably). So the question is – why would anyone still opts for Lo Doc when it firstly would require a higher down payment (40%) as opposed to the standard 20% before mortgage insurance kicks in, and secondly Lo Doc also has a higher interest rate, fees and charges? Nowaday, 20% deposit is a considerable amount of money which would require time to accumulate.

I mean why wait longer to obtain the 40% deposit when one can start the first step toward owning a property with only half of that deposit (not to mention the higher interest charges and fees incur with Lo Doc).  Hence, I am thinking not having to reveal about being a trustee/guarantor may be the reason why people still go for Lo Docs.   

On the surface, I see more disadvantages than benefits in Lo Doc. But perhaps I am wrong.

Jenny carrying on from what Shahin has put you have to understand that whether you are a borrower or a guarantor you will still be treated the same in regards to serviceability.

Whilst not all lenders charge a higher rate for lodoc loans (60% and less) bottom line is if you can provide adequate documentation for a full doc loan go this route rather take the easier lodoc route.

Cheers

Yours in Finance

Of course with lo doc you will need to use a higher deposit base which is another potential disadvantage (particularly if you have an aggressive investment strategy). 

Regards

Shahin