Low Doc Loans Construction
Low Doc Loans for construction are similar to full document construction loans, however the main difference is in income verification.
To verify your income there are three alternatives:-
1/ BAS statements
2/ Accountants Declaration
3/ Six months bank sttaements for your business account.
You can choose any one of the above.
Low doc loans for construction can normally be done up to 80% of the value. That is 80% of the land value for the land settlement and 80% of the final value for the actual building of the home. So How does construction using a low doc loan work?
You must have available at the start of the construction loan 20% of the funds needed to complete. As an example if the land was $250,000 and the building contract was $250,000 then you would need to show funds to complete of $100,000 (or 20%)
For the first part of the construction, you will first be required to contribute your own funds towards the construction cost (unless the lender holds another security property and the total cost of construction is to be funded).
Once you have used you own funds then your low doc loan will then be drawn on to pay the remainder of the cost. The draw down of your low doc loan will be done via progress payments. These progess payments will be paid directly to your licenced builder. Note: you are only charged interest on the funds used, thus reducing the interest charged.
What documents do I need to provide to a low doc lender before progress payments can start?
Low doc construction loans are only available when a licensed builder is used.
A copy of your Builder’s insurance policy
A copy of your Builder’s licence
A copy of your executed Fixed Price HIA/MBA Building Contract
A copy of Council approved plans and specifications.
How do I draw down on a low doc loan for construction?
The builder will provide you with an invoice. Once all your contributions have been made the lender will then pay the builder for the remainder on the draw downs.
Want to know about low doc loans for consruction then call us on 1300 LOW DOC