Self employed individuals have always found themselves pushed against a wall while looking for a home loan, courtesy limited options, high interest rates and few lenders willing to consider their loan application.

However, with the mortgage market turning more competitive, self employed individuals can rejoice with low doc home loans becoming more common in the mortgage market helping self employed individuals enter the property market with ease.


What are low doc home loans?

A low doc loan is a home loan that does not require the usual documentation to verify the borrower’s income.

Popularly known as no paperwork loans, low doc loans require minimal documents for verifying the income of the borrowers, making it an ideal product for self employed individuals who may not have regular income proofs such as salary slips and tax returns.

Who can apply for a low doc loan?

Lenders treat self-employed borrowers as high-risk and are not comfortable lending to these individuals due to lack of conventional income verification documents such as salary slips and tax returns. Low doc loans overcome this barrier by allowing borrowers to present easily available proofs of income such as self certified income statements and business activity statements, making it possible for contractual workers, taxi drivers and other self employed individuals to get a home loan.

What do you need to apply for a low doc loan?

1. As usual, a 20% deposit and if that’s not possible, at least 10% of the purchase price as deposit. (If you aren’t able to save the standard 20% for your home loan deposit, a low deposit home loan with a guarantor might be an option.)

2. Business activity statements (BAS) that have been duly lodged at the Australian Taxation office.

3.  A valid ABN (great if it has been running for at least 24 months), and if applicable, it helps if you have registered your business for sales and goods tax.

4. A duly filled income declaration form. This will vary from lender to lender and will usually ask you to list down your ABN, approximate income, information about the loan and a declaration confirming the truthfulness of the information provided. Some lenders may ask you to list down your assets, while others may not.

Self employed home loans make the mortgage market accessible to individuals who have traditionally been locked out of it due to high interest rates and lack of options. In case you are planning to apply for a self employed mortgage (or a low doc home loan), it is best to contact a lender that specializes in lending to self employed individuals. Get in touch with a mortgage broker (our mortgage brokers will answer all your home loan queries online, free of cost) who can expertly guide you to the right lenders and financial products and make the process of financing your home much simpler.

HashChing understand your home is your most precious investment and helps you in the process of financing by letting you compare broker pre-negotiated home loan deals online for the most competitive rates in the market.

By Vidhu Bajaj


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