"No Doc" or "No Doc Home loan" refers to a mortgage or home loan where you don't have to show proof of your income. All other paperwork, on the other hand, is.
These loans are perfect for people who are self-employed, work as independent contractors, invest, have bad credit, have been bankrupt, or have mortgage payments that are behind. They are also good for people who have been turned down by traditional lenders. People with good incomes can join, but it costs time and money to check their bank accounts.
Due to the higher risk profile, Low Doc Home Loans (Low Document) tend to cost a little more than traditional loans.
This is mostly for people who want to buy residential or investment properties or refinance existing housing properties but don't have PAYG or current tax returns to prove their income, which is usually required for a standard investment loan.
Low-doc or no-doc loans come in three main types.
No Loans Based on Ratios
These loans are for people who don't want to say how much money they make. Since there are no debt-to-income ratios, the lender doesn't have to worry about that. The No Ratio borrower's good credit and many assets make up for the fact that the lender doesn't look at the borrower's income. If getting proof of income is going to be hard and time-consuming, this loan can make the process quick and easy.
No Document Loans
The least amount of paperwork is needed to get the No Doc loans. Your loan request is looked at by the lender with as little financial information as possible from you. This keeps your privacy at a high level.
Stated-Income Loans (Low Doc)
If your income changes from week to week or month to month, the best loans for you are Stated-Income or Low Doc loans. But, unlike No Doc Loans, the Low Doc Loan requires the lender to show proof of income, usually for the past two years, and they may also need to show tax returns and bank statements.
Talk to a mortgage expert if you think a No Doc or Low Doc loan is right for you. You might want to pay a higher interest rate on this loan. A good mortgage banker can also help you figure out how to get the paperwork you need.
