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Within the section we highlight some of the most common product profiles and parameters of 80% low doc home loans. This gives you a brief insight into the mechanics of this type of home loan and how it may suit your needs.
Let's take a look at some of the product parameters which are generally applied across low doc home loan providers who have a maximum 80% lend ratio.
Minimum and Maximum Loan Amounts
In general the maximum loan amount on a low doc home loan is 1 million dollars, this applies if you require 80% of the purchase price as a borrowed amount.
This maximum amount may vary and this will depend on the LVR (Loan to valuation ratio), for example you could potentially borrow up to 2.5 million if the LVR is at 60% of the purchase price. In terms of a minimum home loan amount the general amount is in the vicinity of 50 thousand dollars.
Location Guide
When it comes to the location of a property you're looking to purchase or refinance the home loan providers always use a location guide. Sometimes this is based on the mortgage insurers guide although many low doc home loan providers have their own guidelines.
In general the most commonly purchased or refinanced properties lie in what is called a category 1 or category 2 postcode listing. What this means is that the location is densely populated so the less densely populated areas come under a different category which can range from 3 to 6.
The effect which the location has on a low doc home loan is that of the LVR which the home loan provider will offer. For example a category 1 and 2 location allows you to borrow up to 80% LVR whereas a category 5 location may have a restricted LVR of 65%.
Bear in mind that each low doc home loan provider has their own parameters, so one lender may offer a home loan up to 65% where another home loan provider may offer 75%.
Investment Guide
Low doc home loans can be used to secure investment properties and the LVR allowed here is again up to a maximum of 80%.
A common question is that of how much of the rental income will the home loan providers allow to be used to help service the loan? In general 80% of the rental income can be used to service the low doc home loan; some lenders allow up to 85% whilst others cap this at 70%, overall there is always a component of the rental income which can go toward helping service the loan.
Converting from a Low Doc to a Full Doc Home Loan
Low doc home loans are primarily designed for self employed applicants who are unable to provide a full set of financials, although there will come a time when a self employed person will be able to provide fully verified income details by way of tax returns.
When it comes time to covert from a low doc home loan to a full doc home loan you can either choose to stay with your current financial set up and it would be as simple as providing the proof of income to the lender and selecting a full doc home loan product from their range.
Alternatively you could choose from a wide range of other home loan providers although one thing to consider is the potential for a break cost to apply if you discharge you low doc home loan within a certain period of time.
Generally there is a 3 to 5 year period where if you discharge and move your home loan to another provider a fee will apply, these fees vary from lender to lender and can range from a set fee of $800 or it could be a percentage of the home loan balance at time of discharge.
As you can see there are a number of parameters and guidelines which govern low doc home loans, the best way to find out more about your unique needs is to contact one of our consultants who can answer any questions you may have.
Alternatively you can contact us to arrange an appointment with a low doc home loan consultant and they can sit down with you and help you choose the right home loan for your needs.
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