Upsides of Lo Doc Loans

What is a Lo Doc loan?

Lo Doc Loans stand for low document loans which were designed primarily for small entrepreneurs and self-employed individuals in the country.

The fact is self employed persons may be eligible for real estate mortgages but are not capable of providing documents such as tax returns’ income verification.
So, these Loans can be your only alternative.

What documents do you need to produce to start the process?

The key is to understand first the concept of the Lo Doc Loans which may be approved without standard income verification requirements. In other words, you sign an income declaration and your bank will accept this as proof of your income. It does not have to check your tax returns and other financial statements.
Self Employed people realize and may have experienced the fact that banks perceive them as higher risks. These financial institutions are more stringent with regards to the evaluation of loan applications.
Banks normally require the last two years of tax returns as well as personal and business assessments; financial statements during the last two years; and, Business Activity Statements or interim accounts. The red tape is simply overwhelming.

With the Lo Doc Loans, all you have to do is to declare your income by filling up a simple one-page form. The tax returns of self employed people do not reflect their real revenues.
When these loans were first introduced, a letter from the borrower’s accountant to corroborate their income was required. The contemporary Low Docs have become more flexible!

Good for Self-employed Borrowers
As a rule, self employed borrowers are obligated to present a valid Australian Business Number that has been used for the past two years and registered for the Goods and Services Tax. Nonetheless, certain lending facilities do not require Australian Business Numbers or are contented with ABNs that have just been registered.

This particular loan helps borrowers who are bothered by erratic cash flow or who may not possess any current financial statements. However, they can own adequate equity in existing real estate properties. The Lo Doc Loans can be flexible or fixed rate mortgages or lines of credit and contain a counterbalance provision.

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