Low Doc Home Loans News

Low Doc loans for yellow goods

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Just released.

Low doc loans for yellow goods.

No financials

No BAS

No accountants letter

No trading statements.

Must have clean credit and be for business use.

Includes, fork lifts and materials handling, excavators, diggers, skid steer loaders, trailers, tankers and earth moving equipment.

Similar criteria to low doc car loans:-

To qualify for these low doc yellow goods loans the excavator must be purchased from a licensed dealer.

Low Doc loans for yellow goods – property owner – NO DEPOSIT LOAN

  • Maximum low doc loan amount (including,insurances etc) of $100,000
  • New and used vehicles up to four (4) years old
  • Supplied via a licensed dealership (no private sales)
  • No negative equity to be financed
  • ABN held and gst registered for a minimum of 24 months by applicant (in acceptable industry)
  • Verified property owner with equity
  • Satisfactory Credit Report on applicant and guarantors
  • Standard rates, terms and residuals/balloons to apply
  • Total exposure for all low doc car loans to be less than $250,000*
  • Must be Australian resident.

Low Doc loans for yellow goods – non property owner

  • Maximum low doc loan amount ( insurances etc) of $70,000 after deposit
  • Minimum 30 percent deposit required on all loans
  • New and used vehicles up to four (4) years old
  • Supplied via a licensed dealership (no private sales)
  • No negative equity to be financed
  • ABN held and gst registered for a minimum of 24 months by applicant (in acceptable industry)
  • Satisfactory Credit report on applicant and guarantors
  • Standard rates, terms and residuals/balloons to apply
  • Total exposure for all low doc car loans must be less than $250,000*
  • Must be Australian resident.

Please note this low doc loans product is only available for commercial clients where bona fide business use can be verified.

 

Interest rates

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Low Doc Home Loans interest rates.

Interest rates for low doc home loans can and do vary widely.

Currently there are three year fixed rates starting from 5.57% (CR 6.11%).  This low doc home loan is available through non bank channels. It is generally in line with normal home loan rates. Remember, you cannot walk into one of the big four banks and get this loan.

For Low Doc home loans, normally, if the LVR is 60% or less then the interest rate for  low doc home loans is similar to or the same as normal home loan rates. When the LVR starts to increase or there is some form of credit impairment that the spread between low doc home loans and normal home loans will start to widen.

Having said that, be careful in regards to which low doc home loan lender you go with. Lenders generally have the right to vary interest rates even after the low doc home loan has started.

There may be a perception that by going though one of the big four banks you will get a good low doc home loan rate.

however, the Commonwealth Bank (CBA) has recently advised its broker network to contact their low doc home loan customers to advise them that the bank will be raising the interest rates for some existing low doc home loans customers by 0.25%

CBA has said that it would be writing to all its existing low doc home customers with loans that were funded before 1 April 2012 to advise them interest rates will be lifted unilaterally. This means even though other rates are falling the rates for low doc home loans customers will increase mid December 2012

How significant is this move for low doc borrowers?

Well, to put things in perspective  it is believed that CBA currently has over $5 billion, yes $5 billion worth of low doc home loans on its books.

 

 

 

The future of Low Doc Loans

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It is now common knowledge that the low doc loans of old have gone. Previously if you had an ABN,  had a 20% deposit, and completed a self-certified income declaration then it was fairly simple to get a low doc loan.

As the low doc market matured many of the major banks were lending at interest rates the same as or similar to normal full document home loans. This scenario could not last as it did not take into account the risk profile of low doc loans.

With the advent of the GFC and responsible lending low doc loans changed. This was a change for the better. What it did mean was income was now verified to a higher degree than previously.

This didn’t mean a return to full tax returns. It did mean alternative ways were looked at in substantiating income.

These generally include one of the following:-

  • a letter from your accountant  For many small businesses that use an accountant, who better knows their business circumstances than their regular accountant.
  • 12 months BAS statements  These statements give a good indication as to how the business is actually travelling. Given they are done every three months they are also timely.
  • 6 months business bank trading statements showing the income coming into the business. These statement show the inflows and out flows of the entity generating the income.

The alternative ways of assessing income, including the insistence of two years abn and gst registration by most lenders now mean that income verified under low doc loans is more thorough.

Having the abn and gst registration for two years shows the business is ongoing.

There are commentators that predicted the demise of low doc loans for many years. At this stage they have been proved wrong.

Low doc loans are and always will be a part of the home loan market. Many low doc loans are still be written and this shows no sign of changing.

A lot of  pundits forget that many of Australia’s small businesses are Australia’s wealth generators!

 

 

Low Doc Loans 70

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A Low Doc Loan with a maximum LVR of 70% and NO Lenders mortgage insurance and a cheap interest rate.

Low doc Loans requirements

  • Minimum – 24 months trading
  • Minimum – 24 months Business registration
  • Minimum – 24 months registration for BAS

What documents do you need to provide for this low doc loan?

  • A signed 12 months Profit and Loss account done via the Management Accounts of the Business (MYOB – does not need to be signed by an Accountant), and this can be done for any 12 month period (but no older than 6 months old)
  • BAS for the same 12 month period, this is used to confirm sales in the Profit and Loss etc.
  • Any other income sources (spouses PAYG, rental statements etc).
  • The last date of the Profit and Loss can not be more than 6 months old.  If this is the case will also require BAS to bring us up to date from the last date of the P&L.

How is serviceability calculated for this low doc loan?

  1. Total Net Profit shown in the profit and loss account, plus
  2. Add backs if any (interest on accounts being refinanced etc) shown in the Profit and Loss, plus
  3. Wages from the Group Certificate, plus
  4. Any other income

What do you get?

  • Up to 70% LVR against any residential property with no maximum amount loan size
  • Can be used for any purpose – purchases, refinances, debt consolidation and cash out (cash out max is $1.0m)
  • Products include Variable, Fixed Rates or Professional Package
  • NO Lenders Mortgage Insurance
  • A low doc loan at a cheap interest rate

It is important to note The Profit and Loss does not have to coincide with a financial year.   Just require a 12 month profit and loss for any 12 month period

Here is a low doc loans example:-

Business commences just over two years ago.  For the first full financial year, business was in a start up phase and made a loss. This is normal  For the last 12 months, business has gone strongly.  Under this product there is not an averaging of figures, we are taking the latter profit figures produced.  You can supply a signed Profit and Loss for the last 12 months (where you will be showing the majority profit) plus BAS for the same period + any other income.

All the above is a guide only. All low doc loans are subject to a lenders credit criteria.

Need more help call us on 1300 LOW DOC

 

Hurry, is your low doc loan rate below 6%?

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Low Doc Loans rates are moving up as predicted. The interest rates for fixed low doc loans and variable low doc loans are heading up.

Since the beginning of 2012 we have seen the rate for low doc loans start to get more expensive. If you currently have a low doc loan and your rate is above 6% please call us on 1300 LOW DOC. Hurry this rate for low doc loan refinances will not last long.

Update March 2012

Both low doc loans refinance and low doc loans purchase are still available with no application fee and no monthly fee up to 60%

The rates for low doc loans have now continued to move up. The 5.99% interest rate has now gone. If you are still quick you still may be able to lock in a rate below 6.1%

Remember these low doc loans require no BAS and no accountants letter. However, 12 months business bank trading statements is needed to show strong income.

Hurry

Call us on 1300 LOW DOC

Lending for low doc loans tightens

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Since the Global Financial Crisis there has been a gradual tightening of credit policy. This has been particularly evident in the case of low doc loans. It has been especially noticeable with the major banks. We are often receive a call where the customer is with a particular lender, they have gone to get a top up or change their existing loan and are now subject to the bank’s new lending criteria. A prime example is where the loan was written as a Low Doc Loan a few years ago, and when a top up is requested, the bank is now requiring BAS statements.

Some Low Doc Loans that were written a year ago, or even six months ago are just not able to be written today.

As well as tightening of credit policy, mortgage insurers such as GE and QBE have also tightened and to top it off some of the major banks are now credit scoring.

So what is the answer? The general rule is your first shot is your best shot. Make sure you are aware of what most lenders are requiring.  As a guide, minimum two years ABN, registered for gst, clean credit, purpose of the extra funds outlined, and good repayment history. Be aware also, that once a loan has been to a lender and it has been knocked back, it may be harder to get it approved the second time around with a different lender due to credit scoring.

In summary, even though credit for low doc loans is more difficult,  low doc loans that satisfy the above criteria do have more chance of being approved. Now, more than ever, it pays to get it right the first time.

Large Low Doc Loans

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Large low doc loans are still available.  Many lenders are now capping out their maximum low doc loan amount at $1 million. There is still funding for large million dollar low doc loans above this figure. As a guide you are looking at 1% set up costs and a normal investment home loan rate. Maximum 60% LVR and sound residential security. Cash out available in certain circumstances. Ideal for purchasing or refinancing prestige property.

Updated March 2012

Large Low Doc loans are still available up to $1.5m in major metro areas. If you are looking for a jumbo low doc loan over $2m then these may be available however they are discretionary. The applicant needs to have clean credit, have a strong asset and income position. BAS are not required and neither is an accountants letter. What is required is evidence of strong bank trading statements for the last 12 months.

The maximum LVR is up to 60% of the property value, with a lower LVR being preferred.

Please call us on 1300 LOW DOC     1300 569 362

 

Low Doc Business Loans

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Low Doc Business Loans may be available for applicants that want to purchase a new business. The low doc loan must be secured against an investment property. If the total lending does not exceed 65% there may be no need for ABN or GST registration as long as applicant has a strong asset position. This type of low doc loan is well suited for applicants in one field of work who wish to buy a small business in another industry e.g a bricklayer who now wants to purchase an established coffee shop.

The security property for the low doc business loan must be in a major metropolitan area.

RBA Interest Rates for 2009/2010/2011/2012/2013

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The rate for low doc loans is partly driven by RBA interest movements.

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%

2012

• Tuesday, 2 February 2012          No change
• Tuesday, 6 March 2012              No change
• Tuesday, 3 April 2012               No change
• Tuesday, 1 May 2012               decrease .5%
• Tuesday, 5 June 2012              decrease .25%
• Tuesday, 3 July 2012               No change
• Tuesday, 8 August2012           No change
• Tuesday, 4 September 2012     No change
• Tuesday, 2 October2012         decrease .25%
• Tuesday, 6 November 2012     No change
• Tuesday, 4 December2012         decrease .25%

2013

• Tuesday, 5 February 2013           No change
• Tuesday, 5 March 2013               No change
• Tuesday, 2 April 2013                  No change
• Tuesday, 7 May 2013                  decrease .25%   
• Tuesday, 4 June 2013                 No change
• Tuesday, 2 July 2013                   No change
• Tuesday, 6 August 2013              decrease .25%
• Tuesday, 3 September 2013
• Tuesday, 1 October 2013
• Tuesday, 5 November 2013
• Tuesday, 3 December 2013

The current RBA cash rate target is 2.5%

Positive Credit Reporting

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GOVERNMENT TO INTRODUCE “POSITIVE” CREDIT REPORTING

Responsible lending under the proposed National Consumer Credit Protection Bill 2009 (NCCP) is designed to ensure that consumers are not provided or suggested unsuitable credit for their circumstances.

In early October, Senator Joe Ludwig, Special Minister of State, announced proposed reforms to the Privacy Act and Regulations. An exposure draft of the legislation will not be available until early 2010

The proposed reforms introduce “positive” credit reporting.

Introduction of five “positive” datasets in an individual’s credit report file would enable a more comprehensive assessment of a person’s credit risk. The “positive” datasets are:

1/ type of each credit account opened (e.g. mortgage, credit card, personal loan);

2/ date on which each credit account was opened;

3/ current limit of each open credit account;

4/ date on which each credit account was closed;

5/ credit repayment history, which will include whether in the past two years the individual has met repayment obligations.

Until responsible lending obligations under the NCCP Bill begin in January, 2011, credit repayment history data won’t be available.

However, repayment history may be reported from April 2010.

At the moment credit reporting is “negative”, therefore more limited, eg, it only includes information about any applications for credit and overdue accounts (defaults) etc.

For credit providers, the changes should mean there is more information available for the assessment of a consumer’s financial situation and thus meet responsible lending obligations. However, it may also mean some consumers are refused credit or are offered less.

The above is information only, which is based on a draft of the legislation. It is for general information only and should not be relied on as specific advice for your particular circumstances or as a substitute for professional advice.

Low Doc Loans still available without BAS

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Are Low Doc Loans still available without BAS? Yes. As the major banks have tightened their credit policy in regards to Low Doc Loans, it is true that they have become more expensive. The question is how much more? We are already starting to see some evidence of Low Doc Loans without BAS being quoted at high rates.

However, Low Doc loans without BAS are still available at or near home loan rates. If you are being quoted an investment interest rate that doesn’t begin with 5. something percent you may be paying too much. Generally, to purchase at the 80% mark, you will need clean credit, be registered for GST, it is preferable to have an ABN that has been registered for at least 2 years, and the residential property should be in a major area.

Of course all of the low doc loans applications are subject to a particular lender’s credit criteria.

CBA increases fixed rate Low Doc Loans rates

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Fixed rates for Low Doc Loans on the move up again. Low Doc Loans are getting more expensive. In the last six weeks we have rates for fixed rate low doc loans move over one percent.

As a footnote to the above, CBA are now requiring BAS statements with their 80% low doc loans. There is still alternative low doc finance out there at 80% for both purchases and refinances that do not need BAS.

RAMS increases its fixed rate low doc loans

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RAMS has increased its fixed rates for low doc loans today for loans 1-5 years

Further effective 24 September 2009

All RAMS Low Doc loans applications are to be supported by the following:-

1. Business Activity Statements (BAS) for the past 12 months and ATO Lodgement Reference Number AND
2. The last 3 months account statements evidencing payment of tax as advised on the BAS.

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