Understanding Alt Doc Home Loans

Alt doc home loans (also known as low doc loans) are a very flexible lending solution for self-employed people, property investors, people who do not work regular jobs or for new Australian families who have just moved to Australia. This loan type has taken off in recent years to assist people who have been rejected by mainstream lenders/credit providers.

Alt doc home loans have allowed thousands of Australians to access a home loan. This loan is specifically suitable for people who have assets as well as income, but cannot provide adequate financial statement or tax return as documented evidence of income. Here is a list of people who are suitable for the loan:

Self-employed people who may only pay themselves a standard wage and run their business in a way that means they fall into a lower tax bracket to avoid income tax

Property investors who may have varied income from month to month and from year to year

Contractors and seasoned workers who don’t work regular jobs, and

New Australians families who have just moved to Australia and may not have payslips or tax returns from the work they have been doing since they arrived in Australia

Income Verification Process

An alt doc home loan enables you to self-certify your income, where you state your income (i.e. what you make) on a “Declaration” document and, the lender/credit provider will NOT verify your income by using masses of documentation otherwise required such as tax returns, BAS statements and more.

Restrictions

The conditions for alt doc home loans are more restrictive than standard residential home loans as they provide a higher level of risk to the lender/credit provider, for example:

You cannot borrow more than 85% of the value of the security property

Any alt doc home loan can incur a lenders risk fee premium

Factors Considered by Lenders/Credit Providers when Determining the Interest Rate for Alt Doc Home Loans

Here is a list of factors that lenders/credit providers consider when determining the interest rates:

Nature of and the security property type

Location of the security

Client credit history

Loan size amount

Aggregate of total exposure to the lender/credit provider

If self-employed, the period the client has been in business

Age of borrowers, and

The purpose of seeking finance

Seek Expert and Professional Advice

Before you start the process of obtaining loans on your own, you should first seek the expert assistance of an expert finance broker who specialises in alt doc home loans. Having a specialist finance broker on your side will save you lots of time and heartache. The finance broker will negotiate on your behalf with specialised lenders/credit providers to secure your eligibility for the loan not to mention get you the best low doc home loan deal.