Factors for Comparing Low Doc Property Lending Options
Monday, December 21, 2020, 6:00 PM | Leave Comment
Low doc property lending gets its name from the fact that this loan is available even with lesser documentation.
These are more suitable for freelancers and self-employed individuals, for whom getting a payslip or group certificate is a kind of challenge.
Lack of documents can make it trickier for such people to apply for standard loans. This is where low doc property loans come in.
This is a facility with which non-traditional money borrowers can get property loans without the need of usual documents.
However, you can’t grab any low doc loan you come across.
There are a few points that can help you find the best loan as per your situation.
Key parameters to consider before Low Doc Property Lending
When it comes to low doc property lending, there is no one size fits all scenario. With so many lenders available in the market, it is important to compare the available loan options and make an informed decision.
Here are a few parameters on which you must compare the loan deals.
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Rate of Interest
When you take a loan, you are most concerned about the interest rate you have to pay for it. Low doc property loans can be available with fixed or with variable rates of interest.
A fixed-rate loan allows you to fix the rate of interest for a specific period of time. While fixed rates may be higher than variable ones, they give you the certainty of paying set amounts for a fixed time period.
Another option is the variable interest rate, in which rates of interest may rise as per the market trend, as a result of which the loan may turn out to be more expensive than you thought. Some loans also come with split rate options, which allow splitting parts of loan between variable and fixed interest rates.
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Type of Loan
When you get a property loan, you have to pay back not only the amount you borrowed but also a certain amount of interest rate. Some low doc property lending options offer the interest-only facility, in which you have to repay only the interest rate for a fixed period of time and not the principal amount. There are other options available out there, which you can choose as per your specific situation.
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Extra Repayments
Some loans allow you to make extra payments at certain times. If you are freelancing or self-employed, there may be times when you earn more. During those times, you would want to repay the maximum amount of loan instead of saving the money in your bank account.
Some loans allow you to make extra repayments before time, as a result of which your interest rate and principal amount can reduce, and you can get rid of your loan sooner. However, some lenders who allow this facility may require you to pay a small fee for extra repayments. So, don’t miss to enquire about the same before the loan application.
Redraw Facility
If you have unstable sources of cash flow and your income and expenditure vary all through the year, then a loan with a redraw facility can be helpful in buffering any ups and downs. With this facility, you can withdraw any extra repayments you made towards your loan and pay it back when you are easy with cash. Low doc property lending is often offered at a low rate of interest than personal loans and credit cards, due to which redraw facility seems to be a sensible way of applying for a loan.
Applying for Low Doc Property Lending
Once you compare the loan options available out there and find the one that is suitable for your needs, there are still some documents that you need to gather and show. These include your identity proof, ABN and a registered name of the business, proof of GST registration, BAS statements for 12 months, proof that you have been working in the industry for at least 1 year, business and personal bank statements, a declaration of income from an accountant.
Conclusion
Once you meet the required conditions, you can have your low doc property loan in a much easier and faster manner. Consider low doc property lending over personal loans to get your finance without any trouble.
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