A low doc mortgage can help you get a loan faster and easier than other mortgages, but it also has some major downsides that can be difficult to overcome. If you’re considering getting one of these loans, it’s important to consider all of the pros and cons before making a decision. This guide on everything you need to know about low doc mortgages will help you learn more about this type of loan and how it might fit into your financial plans.
What exactly is a low doc loan?
In a low doc loan, you can leave much of your financial history out of your application and still be approved for a mortgage. This allows many more people to buy homes because they can avoid digging into their financial records to prove their creditworthiness. In addition, there are no special forms or requirements with a low doc loan—they are often easier to apply for and get approved for than conventional loans. As long as you have enough income to afford the loan and some basic information about your credit history, you can qualify easily. What’s not so great about low doc mortgages?: They come with higher interest rates and fees than conventional loans, so if you’re considering one, you must budget accordingly.
The benefits of getting a low doc loan
One of the benefits of getting a low doc loan is that it doesn’t need to be appraised. Since you already have proof of your income, there’s no need for an independent appraisal company to evaluate your home and verify that you have enough money to pay back your loan. While getting a loan through a traditional bank may require multiple sets of paperwork, reaching a low-doc mortgage doesn’t add much hassle to your application process. It can simplify things quite a bit. If you’re looking for an easy way out, consider applying for one today!
How to decide if you qualify for a low doc loan?
If you’re wondering if you can get a low doc loan, there are three questions to ask yourself: Do I have enough money for a deposit? If so, is my income stable? Am I willing to provide supporting documents like bank statements and pay slips? If you answer ‘yes’ to all of these questions, you can get one of these home loans. The great thing about them is that they don’t require huge upfront deposits, so many people who wouldn’t have been able to buy before can now take out a home loan with lower rates. If your mortgage broker thinks you might be eligible for one of these home loans, they should be able to help put together a package that will satisfy your lender and get their approval.
When should you consider a low doc loan?
You can take out a low doc loan if you want to buy a property or refinance one. If you’re looking to purchase a home, a low doc loan is probably preferable as it doesn’t require as much paperwork and gives you access to more equity earlier on in your mortgage term. This can be useful if you want to get into investment properties and need extra funds quickly. There are some restrictions, however, so make sure that any property you buy with less than a 20% deposit is an investment property that fits your overall borrowing strategy and financial plan.
