What is the difference between a standard home loan and a low doc home loan?

A standard home loan is a traditional mortgage that requires comprehensive documentation to verify your income, assets, and other financial information. Lenders typically require proof of income, such as pay stubs, tax returns, and bank statements, as well as a good credit history. On the other hand, a low doc (short for "low documentation") home loan is designed for borrowers who may not have the documentation required for a standard home loan. This could include self-employed individuals, freelancers, or small business owners who may have a fluctuating income or difficulty providing traditional proof of income. Low doc loans typically require less documentation, such as a declaration of your income and assets signed by you, instead of detailed financial statements. Some lenders may also require a letter from your accountant confirming your income. Because low doc loans are considered higher risk for lenders due to the limited documentation, they often come with higher interest rates and fees compared to standard home loans. Additionally, the loan-to-value ratio (LVR) may be lower, meaning you may need a larger deposit. It's important to carefully consider your options and seek advice from a financial advisor or mortgage broker to determine if a low doc loan is right for your situation.

"Low Doc" stands for Low Documentation and is typically an assessment policy where lenders will utilise alternative methods to assess a self employed borrowers income. Typically a self employed borrower, under a "Full Doc" assessment, would have to provide two years of financial reports and tax returns to demonstrate their income and ability to meet the repayments for the proposed loan. Under a "Low Doc" assessment the lender may, in some cases, rest on BAS and/or a letter from the borrowers accountant and/or other alternative assessment methods to demonstrate income available to service debt.

A Low Doc Home Loan is only for self employed applicants. A standard home loan for the Self Employed would require 2 years of lodged financial / tax returns. For low doc home loans, you will need to satisfy the lender with a confirmation of income and profit. This can be a declaration of income certified by your accountant or Business Bank Statements or BAS Statements.

Hi there, A low doc or alt/ernate doc loan is only available for self employed applicants. A standard home loan requires you to provide proof of income to a higher degree (tax returns, financials etc) whereas a low doc (or alternate doc) loan is available in circumstances where your tax returns are yet to be completed. Low doc proof of income can come in the form of BAS statements, Accountant declarations or bank statement credits. Low doc loans will come with a higher rate and potentially a risk fee.

A standard home loan is the most common type of loan used to purchase a property. It requires the borrower to provide full documentation of their financial situation, such as income, expenses and assets. This allows the lender to assess the borrower’s ability to meet their loan repayments. A low doc home loan is designed for people who are self-employed or have a complex income structure. It requires less documentation than a standard home loan, such as a tax return or proof of income. This makes it easier for self-employed people to access a loan. However, the interest rate for a low doc loan is usually higher than for a standard loan. It is important to compare different loan options and consider the features, fees and interest rates before deciding which loan is right for you. You can check out Goodrate on https://goodrate.com.au/home-loan to see current interest rate offers.