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Lo-Doc loans are primarily provided by financial institutions to cater for self-employed individuals. The Commercial Lo-Doc products offer our clients a much simpler application process where minimal documentation is required for the time conscious business person. Lo-Doc or No-Doc products have lower loan to valuation ratios (LVR) with a restriction towards maximum loan size. This is due to the additional risk associated with the lenders only requiring minimal income evidence compared to traditional lenders.
As there is higher risk involved the majority of the lenders will ensure that a valuation is conducted on the security offered. It is also important that our clients note that the normal reference checks are still required and performed by the Financial Institution chosen.
Lo-Doc Loans can be used for the following:
- Purchase of Commercial property
- Commercial construction
- Purchase or refinance of Commercial Strata Units or Townhouses
- Refinance of Commercial or residential investment properties
- Purchase or refinance of rural property
- Purchase of vacant land (limitations on amount of hectares purchased, this varies with different lenders)
Lo-Doc financial products can be defined simply as loans offered by lending institutions to self-employed applicants. There are some fundamental differences between traditional Commercial loans and a lo-doc Commercial loan, some of the differences for lo-doc loans are highlighted below:
- A reduced set of documentation (for serviceability purposes)
- Lower loan to valuation ratio
- Loan size limitations (relating to the additional risk lending institutions may be exposed to because of reduced evidence of income)
- Higher premium to standard variable rates
- ABN’s are confirmed and cross checked by lenders for all self-employed applicants
When establishing a lo-doc loan the required documentation varies from full-verified set of documents required, to No-Doc's or Asset Lend. It is usually required that the borrowers sign a declaration confirming their yearly taxable income (as financials may not be available).
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