To qualify for these low doc loans for cars the applicant must be either a sole trader, partnership or company. The small business owner must be ABN and gst registered for a minimum of two years. If you are a property owner it may be possible to do a vehicle no deposit low doc loan. For full details see page on Low Doc car Loans.

It seems people are now being conditioned by the banks that more paperwork is required when applying for low doc loans. The normal options are either Accountants letter, BAS statements, or trading statements. This extra paperwork applies to residential property low doc loans which are governed by the NCCP.

In regards to commercial low doc loans, in many cases we don’t require all this extra paperwork. We have recently been offered access to funding large low doc commercial loans with a minimum loan size of $3m. As well as the large low doc commercial loans there is now development finance becoming available for deals that the banks wont do.

As always, if you have a scenario please call us.

These low doc loans will require three months trading statements for the self employed entity that is generating the income.

Currently there is no application fee, no ongoing fee and no early repayment fee with these low doc loans.

Why are we asking for bank trading statements?

Because under the new NCCP  legislation we must make reasonable enquiries to verify a borrower’s financial situation and objectives.

As well as self certification, lenders have been asking for supporting information, such as:
• bank statements
• cash flow forecasts
• wages/income verification
• accountants verification, etc

For this particular loan BAS are not required. Instead, the bank trading statements are needed to show income going through the business entity.

So what does this mean for low doc loans? It means any low doc loan must now be verified in one of three ways. Either bank trading statements, BAS or an accountant’s sign off only. Of these three, we have found the third option is the most popular. This makes sense, as many accountants have known their customers for a long time and are intimate with their businesses. So, if you are looking for a low doc loan, and have an accountant that is able to sign off on your declared income, please call us on 1300 LOW DOC

For development finance, we now have access to a funding line coming from offshore. This Project finance is for sound developments between $10m to $100m. As local Australian banks have tightened their development lending, offshore funding has now stepped in to fill this gap.

If you require development finance, please call us on 1300 LOW DOC

At 60%, can be done at or near normal home loan rates.  The applicant must be an individual and there cannot be more than one building constructed.

A Low Doc Loan Construction at 80% can also be done, however there will be a slight loading due to the extra risk.

It is preferable to have stamped council approved plans and specifications, however if required the land only may be settled first.

Builder must be a major licensed major builder, have builders insurance and applicant must have clean credit.

For both of  these types of low doc loan need 2 years ABN and registered for GST. No BAS or trading statements required.

Building will be inspected at each stage of progressive drawdowns.

Call 1300 LOW DOC ( 1300 569 362) now to see if you qualify.

Westpac

The maximum LVR on Westpac Low Doc Loans will be reduced from 82% to 80%, effective Wednesday 20 January 2010.

This change will also apply to existing customers that have low doc loans that need to be re-originated as a result of a top up.

If a customer pays the mortgage insurance separately (or upfront) the total low doc loan amount will still be 80%

RAMS

RAMS Low Doc Loans will be a maximum of 80% including mortgage insurance from Thursday 21st January 2010

As a footnote to the above, Westpac and many of the major banks are now requiring BAS statements with their low doc loans. Given this requirement for BAS, is this really a low doc loan? There are still alternative low doc lenders out there at 80% for both purchases and refinances that do not need BAS.

Low Doc Loans can be on either owner occupied, or investment properties.
They require an income declaration.
Should have an ABN for 2 years and be registered for GST.
A normal LVR is 60% without mortgage insurance, and 80% with mortgage insurance.
Rates on low doc loans are either at, or near home loan rates.
Normally a term loan of 25-30 years.

No Doc Loans

Must be on investment properties.
Do not require an income declaration, however will still need Assets and Liabilities position.
Do not require ABN or GST registration.
Normal LVR is 65%, however in some cases can go to 80%.
Rates are priced according to risk and are more expensive than low doc loans.
No Doc Loans are normally short term up to 3 years, however in some cases it is possible to go out to 25 years.

The above is a guide only and can change at any time.

Up to 10 per cent of loans funded under the next planned round of $8 billion in investment may be low doc, though still secured over the borrower’s home….

Full article from The Sheet

This move by Westpac clearly dispels that argument.

Treasurer, Wayne Swan has been less than impressed with Westpac’s extra rate increase!

St George Low Doc Loans will go up  .39%

Citibank Low Doc Loans to increase .39%

CBA low doc loans will rise by .37%.

ANZ low doc loans to go up .35%

Bankwest low doc loans move .35%

As the bank does not normally meet in January, the next meeting for the RBA after December 1 should 2 February 2010

For low doc loans with larger defaults they are still available. As a guide these low doc loans, may be done for residential properties in major metropolitan areas and up to 80% of the value or purchase price.

For credit impaired low doc loans without BAS the following will also be required:-

The last 4 months bank statements for your business account, transaction account, and last personal bank account statement.

With credit impaired low doc loans each one is assessed on its merits.

Please call us on 1300 LOW DOC and we will let you know what pricing we can do for you.

We are also starting to see some lenders add a margin for the perceived increased risk of low doc loans.

Over time, the banks then started to slowly start to enter this space. In 2005, the RBA commented about Low Doc Loans.

For the full article.

With the beginning of the credit crisis in 2008, there was a general tightening of lending across the board. Much of this was to do with bad credit. There has been confusion between bad credit and Low Doc Loans. In Australia they are different. Most Low Doc loans in Australia are for self employed with minimal paperwork and are normally clean credit.

Standard & Poor’s in October 2009, has indicated Low Doc Loans in Australia are not a problem.

Standard & Poor’s has backed the government’s decision to direct the Australia Office of Financial Management to invest in residential mortgage backed securities with a higher proportion of small business loans when it invests the additional $8 billion the government has allocated to support new RMBS issues.

For the full article.

Low Doc Loans are still being written, but they change as the credit markets change. With the norm for the banks now being 60%, Low Doc Loans have effectively gone full circle. Low Doc Loans without BAS at 80% are still possible, however they will be priced according to risk.

With this in mind, even though lending for Low Doc Loans has tightened, with the credit markets starting to free up again, over time, Low Doc lending will also start to free up again as well.

If you want to know the future for Low Doc Loans, one guide is to look at the general credit markets. When things are perceived as bad, low doc lending will be tight. When things are perceived as optimistic, low doc lending will be more liberal.

Since writing this post in late 2009, in March 2010 Macquarie has already returned to the low doc market. This is an indication of where we are heading and it has happened quite quickly.

Macquarie Low Doc Loans

Given the current credit climate it may also be timely to remind customers of the risks associated with Low Doc Loans. The following from ASIC may help.

The above is information only and not advice.