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.

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If you would like a free property market update, then please visit the Investment Property website, fill out the form and you will be emailed a free property market report.

The report contains a snapshot of what is happening in the major cities, house and unit prices, changes in dwelling values, and capital cities capital growth and sales volume.

The report is over 20 pages in length. For full details of what is contained within the report see Investorpac.

To qualify for low doc car loans you must have an ABN for at least 24 months, and have clean credit. The vehicle must be purchased from a licensed dealer.

For full details and rate see Low Doc car loans

Low Doc Loans are not dead! Low doc loans are still available, however, they now require more verification.

With the banks adopting more cautious lending policies  it would appear the self employed, as the largest group of low doc loans borrowers, have been the hardest hit by both the GFC and NCCP.  As with anything new it will take time to adjust, however, eventually small business owners will adapt to the new credit environment we are in.

So in conclusion, the lending criteria for major banks is now changing rapidly, and BAS is now part of the landscape.

There has been a real tightening of credit policy by the banks. The days of the low doc declaration only have disappeared. Banks are now starting to take a “limited income evidence” approach. CBA have just changed their low doc loans policy to require BAS statements on all low doc loans.

Further, we have just seen RAMS Home Loans founder John Kinghorn warn that home loans to self employed may dry up.

What does this mean for those looking for low doc loans?

Lenders are looking for further verification as to the income declared. This can take the form of bank trading statements, BAS statements or an accountants letter.

Currently the more difficult low doc loans are 80% low doc refinances and construction.

• NO LMI applicable between 60% & 70%
• Max loan amount $1.5m on single security and $2m for multiple securities
• Available for purchases and refinance (no cash out or consolidation of unsecured debt)
• Refinance business debt up to 20% of loan amount
• Company and trust borrowers acceptable
• Construction available
• Bridging Finance
• 100% Offset
• Lo Doc to full doc conversions available anytime
• BAS and Bank Statements
• Lo Doc declaration & Accountant verification

Applicants, which can also include companies, must have clean credit and current loan must have been paid on time. This is to be shown through six months loans statements. Specialised securities are not acceptable at 75%. Can be for both owner occupiers and investors. Must have 2 years ABN.

Max interest only period is three years, however maximum loan term can be 25 years.

True term loan.

Interest rates for Low Doc Commercial

As a guide the loan being refinanced should be a full document loan and if there are any extra funds being requested then the purpose of these extra funds must be clearly stated.

Full Doc Loan to Low Doc Loan at 80%

For 80% refinance low doc loans

Require:-

1. Income Declaration Form
2. BAS
3. No business trading statements
4. Six months current loan statements (including credit card statements) showing excellent repayment history (absolutely no over limit or missed payments)
5. Clean credit
6. Two years ABN
7. Registered for GST
8. The applicant must be clearly able to demonstrate capacity to repay the loan.

Low Doc Loan to Low Doc Loan at 80%

If the loan being refinanced is a low doc loan and you want to refinance to 80%, the purpose of the extra funds must be clearly explained. The applicant must be clearly able to demonstrate capacity to repay the loan.

Require

1. Income Declaration Form
2. BAS
3. Three months business trading statements
4. One months personal statements
5. Six months current home loan statements showing excellent repayment history (absolutely no over limit or missed payments)
6. Clean credit
7. Two years ABN
8. Registered for GST
9. 60 to 70% NO LMI charged to customer

What does this mean?

Refinances will no longer be available, using a Bankwest Low Doc Loan.

For purchases there will be the re launch of the Easy Doc Product. This means there will only be one rate irrespective of the LVR. The Easy Doc Home Loan will automatically roll to the Lite Home Loan after the 3rd year anniversary date

60% LVR

Generally low doc loans 60% or less do not require mortgage insurance.  For this reason they are easier to qualify for. However, they do require 40% equity.

Up to 80%

These low doc loans are normally mortgage insured, however, it is possible to get 80% low doc loans without BAS, without mortgage insurance. For the mortgage insurance low doc loans, one of the first things looked at is the postcode. In many cases, the postcode of the security property will determine what level the mortgage insurer will go to. To search these mortgage insurance postcodes, click on this location wizard, and enter your postcode.

The figure under LMI Self Certified is the maximum loan size the mortgage insurer will consider in that postcode.

If your postcode returns “On Application”, then this generally indicates that in the eyes of the mortgage insurer the security area may not be as strong.

St George Low Doc Loans and Westpac Low Doc Loans have held off moving more than the RBA rate increase as well.

Both the CBA and ANZ will also increase their deposit rates by 0.25% as well

Are rates heading back to normal?

What’s normal home loan rates?

As a footnote to the above, ANZ Low Doc Loans are no longer being done at 80%. CBA and many of the major banks are now requiring BAS statements with their 80% low doc loans. Given this need 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.

85% LVR Low Doc Loan for clean credit still achievable in major metropolitan areas.

Also Low Doc Loans for vacant land are still attainable as long as land has an investment purpose. A low doc loan for vacant land is similar to a Serviced Apartment Low Doc Loan and is considered on a case by case basis.

Looking for a low doc loan for your motorcycle purchase, or a marine low doc loan? then call us 1300 LOW DOC

Rates are different dependent on upon whether it is a refinance of an existing low doc loan, or a purchase. Rates as per the home page.

If you are in Sydney, the rate may be cheaper for the LOW DOC 80 with NO BAS NO ABN refinances.

Low Doc Construction 80% LVR with No BAS returns also considered in major metropolitan areas. Tender must be from a major licensed builder.

RBA interest rates are normally set when the bank meets on the first Tuesday of each month, except January.

2009

RBA interest rates for 2009

• Tuesday, 3 February 2009 rates        decrease 1%
• Tuesday, 3 March 2009                    No change
• Tuesday, 7 April 2009 rates              decrease .25%
• Tuesday, 5 May 2009                       No change
• Tuesday, 2 June 2009                       No change
• Tuesday, 7 July 2009                        No change
• Tuesday, 4 August 2009                    No change
• Tuesday, 1 September 2009              No change
• Tuesday, 6 October 2009 rates          increase .25%
• Tuesday, 3 November 2009 rates       increase .25%
• Tuesday, 1 December 2009 rates       increase .25%

At the RBA meetings, when they move their rates, the variable rates for low doc loans normally move as well. Having said that, the major banks can, and do move their rates when and how much they want.

As a guide, and a guide only, you can expect the variable rate for most low doc loans to sit between 2 and 3% above the current RBA cash rate target.

2010

RBA interest rates for 2010

• Tuesday, 2 February 2010 rates on hold
• Tuesday, 2 March 2010 rates       increase .25%
• Tuesday, 6 April 2010 rates          increase .25%
• Tuesday, 4 May 2010 rates          increase .25%
• Tuesday, 1 June 2010                  No change
• Tuesday, 6 July 2010                   No change
• Tuesday, 3 August 2010               No change
• Tuesday, 2 September 2010         No change
• Tuesday, 5 October 2010             No change
• Tuesday, 2 November 2010          increase .25%
• Tuesday, 7 December 2010          No change

2011

In 2011, at the RBA meetings, the bank has set the rates as follows:-

RBA interest rates for 2011

• Tuesday, 1 February 2011          No change
• Tuesday, 1 March 2011              No change
• Tuesday, 5 April 2011                 No change
• Tuesday, 3 May 2011                 No change
• Tuesday, 7 June 2011                No change
• Tuesday, 5 July 2011                 No change
• Tuesday, 2 August 2011             No change
• Tuesday, 6 September 2011       No change
• Tuesday, 4 October 2011           No change
• Tuesday, 1 November 2011        decrease .25%
• Tuesday, 6 December 2011        decrease .25%

The current RBA cash rate target is 4.25%