Low Doc Home Loans

If you’re a freelancer, self-employed or a small business owner looking to refinance, you may find yourself not having the same required documents for a standard home loan application. If this is the case, a home loan which requires less documentation can be a viable option for you.

At Rateseeker, we can help find the best low doc loan interest rates for you, comparing home loan rates across 30+ Australian lenders.

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Low Doc Loans

Low doc loans aren’t no doc loans

It’s important to note that a low doc loan doesn’t mean ‘No doc loan’. It’s just as it sounds – a loan requiring less documentation of regular income and assets which outweigh risky liabilities in the eyes of a lender. Like traditional home loans, low doc home loans require a set amount of documentations and requirements:

Borrowers must possess a clean credit history.
Maximum borrowing of 80% of the property’s purchase price. You will have to be able to borrow a maximum of 60% if you wish to avoid paying Lenders Mortgage Insurance (LMI).
Have evidence of full property valuations.
No second mortgage on a property.
Self-employed for at least 1 year (some lenders require 2 years).
Evidence of ABN registration for 6 months
Evidence of GST registration for 6 months
A declaration of financial position with one of the following: 6 months business bank statements (inclusive of last 1 month) or 6 months business activity statements (BAS).

→ Learn More: Calculate your overall repayments for your low doc loan

Choosing a Low Doc Loan That is Right For You

Compared to traditional home loans, low doc loans are considered higher risk due to their large borrowing amount by lenders. As a result, they have more restrictions.

While there are a few lenders in Australia that offer low doc home loan products, they may offer significantly high interest rates.

Our Rateseeker experts have outlined what you should consider when applying for this type of loan:

High interest rates: This depends on the lender you choose and the verification document that you can provide.
Larger deposit amount: For this type of home loan, 20% deposits are typically required
LMI: You may have to pay our Mortgage insurance if you borrow over a 60% Loan To Value Ratio (LVR)

→ Learn more: Compare interest-rates for a number of loan products with a click of a button

Getting approval

Getting approval for a low doc home loan isn’t as straightforward as most traditional loans. We suggest following a guideline to help you find the appropriate lender:

Research which documents you know that you can provide, what your needs are and which lenders and low doc products you can qualify for.
Select a lender with low interest rates, fees and LMI premium, and the loan features that best suit your financial situation.
Take into consideration the application fees and LMI fee that competing lenders are offering.
Present your application in a way that is seen favourably by lenders. Provide partial proof of your income such as full financial statements and tax returns.

Pro-tip: Lenders cannot ignore a document when they’re completing their assessment, so only provide documents requested by the lender and nothing more.

→ Wondering if you qualify for a low doc loan? Find out more in our FAQs.

Struggling to find the low doc loan that best suits your needs? Use our free calculators to help you with your next property purchase or refinance for any given interest rate and loan term. Alternatively, don’t hesitate to contact our team today.

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FAQs about Low Doc Home Loans

What is a Low Doc Loan?

A Low Doc Home Loan (or a low documentation loan) is a type of mortgage that can be taken out using less documentation than what is required for a full documentation mortgage.

How do Low Doc loans work?

Low-doc loans are flexible solutions for customers who are self-employed, work as contractors or freelands, or don’t have the standard PAYG payslips, financial statements or tax returns needed for a traditional home loan application. These types of loans rely on self-verification income, which requires a supporting letter from your accountant and any recent bank statements. You may also need to supply your most recent Business Activity Statements (BAS).

How much can I borrow on a Low Doc loan?

If you’re considering a low doc loan, you are required to have a maximum borrowing capacity of 80% of the property’s purchase price. If you wish to avoid Lenders Mortgage Insurance (LMI), you will generally only be able to borrow a maximum of 60%.

How much deposit is needed for a Low Doc loan?

For most low doc home loans, lenders will require a deposit of at least 20% of the property prices, although some lenders accept 10%. If you are looking to get a home loan with a 5% deposit, you will need to provide two years of tax returns.

How to apply for a Low Doc loan?

When you apply for a low doc home loan, some lenders will require a minimum of 2 documents, which can include the following:

Is it hard to get a Low Doc home loan?

Low doc home loans are pitched specifically at borrowers who are unable to meet a lenders’ traditional proof of income requirements. Low doc loans are considered risky investments so most major banks and lenders will avoid offering one

What are the disadvantages of a low doc loan?

As low doc loans are considered higher risk loans by most lenders, the following home loan poses several disadvantages, including:

Why choose Rateseeker to assist you with Low Doc loans?

Whether you’re working full-time or as a freelancer, Rateseeker aims to help Australians of all working backgrounds to get closer to the dream property they always wanted. With over 20+ years of experience in the mortgage broking industry, Rateseeker has assisted many Australians to better understand their financial decisions, and lead them to the right home loan that best suits their lifestyle, including finding non-risky low doc home loans. Whatever loan product you are after, our easy-to-use calculators allow you to estimate how much you need to borrow to buy the property every time. Contact us today and discover what Rateseeker can do for you.

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Meet one of our experts

Director Nick Chong

As a founder of Ardent Capital Group, Nick Chong brings more than 12 years of financial planning and mortgage broking experience. This, together with his strong economics background, gives him the expertise to lead his handpicked talented team of advisers.

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