Verify Income in Alternative Way (typically used by Self-Emplyed)

LOW DOC LOANS

LOW DOC LOANS / ALT DOC LOANS

Verify Income in Alternative Way (typically used by Self-Emplyed)

Low Doc Loans (Low Documentation Loans) / Alt Doc Loans (Alternative Documentation Loans) are the ones available to who is not able to prove their income in the traditional way. For instance, self-employed people might not have their recent tax return and financial statements ready yet: low doc option might be the only option available.  

As these home loans carry a higher risk, lender usually apply different conditions:

  • higher interest rate,
  • larger deposit requirement,
  • borrowing a smaller percentage of the property value (usually 60% but some lender more)
  • LMI (Lender’s Mortgage Insurance) applicable before the traditional borrowing limits (above 60% of the property value might start to be applied).

The main documents that can be used to verify the income are:

  • letter of the account stating income,
  • Business Activity Statements (BAS) proving turnover,
  • bank statements proving your turnover, 
  • old tax returns,
  • interim financial statements.

Business must have an ABN which has a GST registered for at least 2 years, but some lender will consider even 1 year ABN registration or less. In these cases, different conditions will be applied.

 

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