No Doc Home Loans

 

What is a no doc loan?

A no doc loan is similar to a low doc loan in that no tax returns are required to get your loan approved.

However, unlike a low doc loan you don’t need to provide some limited form of income evidence.

Instead you’ll sign an affordability statement which confirms that you understand the amount of the repayments and that you can afford the debt.

You’ll also be required to sign an investment or business purpose declaration to prove that the loan is NCCP unregulated.

 

Income evidence

Unlike a low doc loan, no evidence of your income is required.

This means you don’t need tax returns, BAS statements, an accountant’s letter or bank account statements to verify your income.

Please be aware that some lenders will still ask you to sign a statement of your assets and liabilities or a declaration that confirms that you can afford the loan. If they ask you to sign a declaration then it will not ask you to confirm your income, just that you can afford the repayments.

Loan purpose

Your loan must be NCCP unregulated. This means that your loan must meet one of the below criteria:

Your loan must be for business purposes.
Your loan must be for investment purposes (other than in residential property).
Your loan must be in the name of a company or trust.

If your loan doesn’t fit into at least one of the above conditions then it will be declined by all no doc lenders.

This is because the National Consumer Credit Protection (NCCP) Act covers all loans with a purpose that is personal, owner occupied or for investment in residential property. Under the Act, the lender is breaking the law if they don’t verify your income. This is why all no doc loans must be NCCP unregulated.

Security

The security for the loan is all that the lender is relying upon. For this reason, the lender is very particular about the property that they’re taking as security.

As a general rule the property must be:

In a good location.
In good condition.
Larger than 50m2 for a unit or under 2 hectares for land.
Readily saleable.
Offices, factories, warehouses and retail may be acceptable for a commercial no doc.

Credit history

Whilst some no doc lenders will approve a loan for someone with an impaired credit history, this isn’t the case for all lenders.

If you have a problem with your credit history then you’ll almost certainly pay a higher interest rate.

Exit strategy

No doc loans aren’t normally designed to be for a long period of time. In most cases, they have a term of 6 months or 12 months and then their interest rate will increase.

Lenders want to know how you plan to repay the loan. In most cases, the borrower plans to sell the property or another asset to repay the loan.

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