Low doc home loans – are they only for self-employed people wanting to buy a house?
Low doc home loans are primarily used by small business owners who may not have the documentation required to apply for a “standard” home loan. Beyond the purchase of a house though, low doc loans can be used for other purposes.
This year CANSTAR has researched 58 low doc loans from 14 lenders. We found that with the surveyed institutions, you can potentially draw down a low doc loan (subject to loan approval) for the following types of uses:
What can I use a low doc loan for?
| Loan Purpose Availability | |
| Loan Purposes | Institutions |
|---|---|
| Personal Use | AMO Group
ANZ Bank of Melbourne BankSA BOQ Commonwealth Bank Homeloans Liberty Financial Pepper Money RAMS RESI Mortgage Corp St George Bank State Custodians Westpac |
| Business Purpose | ANZ
Homeloans RAMS State Custodians Westpac |
| Refinancing | AMO Group
ANZ BOQ Commonwealth Bank Liberty Financial Pepper Money RAMS RESI Mortgage Corp State Custodians Westpac |
| Share Purchase | AMO Group
ANZ BOQ Commonwealth Bank Liberty Financial Pepper Money RAMS State Custodians Westpac |
| Consolidate Debt | AMO Group
BOQ Commonwealth Bank Liberty Financial Pepper Money RAMS State Custodians Westpac |
| Equity Release | AMO Group
ANZ BOQ Commonwealth Bank Liberty Financial Pepper Money RAMS State Custodians Westpac |
| Repay ATO Debt | State Custodians |
| Repay Business Debt | RAMS
State Custodians |
| Source: www.canstar.com.au. Based on information provided to Canstar from the financial institutions assessed for the 2016 Low Doc Loans ratings report. Correct at time of writing. | |
Just because you can get a low doc loan for various purposes, though, doesn’t it mean it will automatically be a good idea. Sometimes you might be better off with a personal loan, or a business loan (both of which you can compare on our website).
This is because banks treat lending to those who are self-employed or have fluctuating incomes as bringing a higher level of risk, and they compensate for this by charging higher interest rates and fees on average.
So the key message is, be sure to do your research before diving in. You can compare low doc loans researched by Canstar on our website.
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