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Mortgages

Low doc and non-conforming loans

Published 22 Nov 2023

Updated 25 Nov 2023

Read Time8 minutes

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Frequently asked questions

Top FAQs about low doc and non-conforming loans

What is a low doc loan?

A low doc loan, short for low documentation loan, is a type of mortgage that requires less documentation for approval, making it suitable for self-employed individuals or those with irregular income.

Who is eligible for a low doc loan?

Self-employed individuals or those with non-traditional income sources may be eligible. Requirements vary among lenders, but generally, you need to provide less documentation compared to a standard loan.

What documentation is required for a low doc loan?

Requirements vary, but you typically need to provide proof of income, assets, and liabilities. The exact documents depend on the lender and the type of low doc loan.

How does a non-conforming loan differ from a traditional loan?

Non-conforming loans, also known as non-standard or specialist loans, are designed for borrowers who don't meet the standard lending criteria. This may include individuals with a poor credit history or irregular income.

Who qualifies for a non-conforming loan?

Borrowers with a history of credit issues, irregular income, or those who don't meet the traditional lending criteria may qualify for a non-conforming loan.

What interest rates can I expect with low doc or non-conforming loans?

Interest rates are often higher than standard loans to reflect the increased risk for lenders. Rates can vary, and it's essential to shop around for the best deal.

Can I use a low doc or non-conforming loan for any property type?

Depending on the lender, you may be able to use these loans for various property types, including residential, commercial, or investment properties.

How much deposit is required for low doc or non-conforming loans?

The deposit required can vary, but it's common for lenders to ask for a larger deposit compared to standard loans, potentially up to 20% or more.

Are there any restrictions on the loan amount for low doc or non-conforming loans?

Loan amounts may be capped, and the maximum loan-to-value ratio (LVR) could be lower compared to standard loans. This varies among lenders.

Can I refinance a low doc or non-conforming loan to a standard loan later?

It's possible, but it may depend on factors like improved financial stability and credit history. Discuss your options with your lender.