If you are self-employed, you may not have all of the usual documentation such as your latest tax return which is usually required to apply for a home loan. But that doesn’t mean you can’t achieve your dream of becoming a home owner or property investor.

What is a low doc home loan?

The Low Doc Home Loan (short for low documentation) is designed for self-employed people and allows you to secure a mortgage without the financial statements or tax returns usually required.

When you’re busy running your business, staff and everything in between, organising paperwork can be a massive hassle. However, a low doc home loan allows for the provision of documentation to suite a small business’ unique needs such as your business activity statement, income declaration and registration for GST.

How much deposit will I need?

Most lenders will require you to have at least a 20% deposit and you will be required to pay lenders mortgage insurance.  Keep in mind, lenders mortgage insurance doesn’t protect you the borrower, instead it protects the lender in the case you forfeit on your home loan.

Generally, you will need to have saved a minimum of 20% of the property value. For example, if you’re borrowing $500,000 for a property, you’ll need to have saved up $100,000 plus costs.

If you’re borrowing less than 60% LVR of the property value then you will not be required to pay lenders mortgage insurance and your interest rate will be lower if you can provide your latest tax return and ATO notice of assessment.

While the deposit can be one of the biggest expenses when it comes to buying a property, there are plenty of other costs that should be factored in, such as stamp duty, home loan application fees, ongoing fees and repayments and council rates etc.

Will my interest rate be higher?

Yes, your interest rate will be higher because you are viewed as a higher risk to the bank because you cannot prove a full 12 months income with a lodged tax return and ATO notice of assessment. Make sure you take a good look at your financial situation to determine whether you can service the home loan and all the other costs with owning a property. Use Trusted Mortgage Broker’s home loan repayments calculator to help you decide how much you can afford to borrow.

If you’re self-employed and looking to buy a home or investment property, talk to us about how to get started. We can also provide support and advice to help you achieve your business goals. Simply make an appointment online or contact us.