If you are a self-employed borrower, applying for a home loan comes with a unique set of complexities that is not applicable for PAYG applicants. The options available are either Full Doc or Low Doc home loans. Here is a breakdown of the requirements for both.

What is a Full Doc Home Loan?

Full doc home loans essentially come under the standard home loan verification policies whereby all information provided must be verified by supporting documentation. This type of home loan is suitable for self employed borrowers who have up-to-date financial documents showing income required to afford the loan being applied for.

What documents are required for a Full Doc Home Loan?

• 2 Years of ABN registration
• 2 Years of personal and business tax returns
• Recent business bank statements
• Recent two years business bank statements
• Recent two years of profit and loss statement and balance sheets.

Why choose a full doc loan?

You can expect to pay a lower interest rate with a full doc loan as opposed to a low doc loan, so the financial benefit often makes it a preferred option for self-employed borrowers. A lower interest rate also translates in an increase in borrowing capacity which consequently broadens potential options.

What is a Low Doc Loan?

Low Doc loans are products that have been designed to service self-employed applicants who may not have the required financial documentation available for a full doc home loan.

What documents are required for a Low Doc Home Loan?

• 2 Years ABN registration (some lenders may accept less)
• 12 months BAS statements
• 6 months bank statement for main business account.
• Accountant’s letter.

Why choose a Low Doc Loan?

A Low Doc loan can be a suitable option for a self-employed borrower if their income supports the loan amount being sought but they lack the self-employed documentation to verify. It is also a sound option for those applicants whose income is subject to fluctuation. They do, however often come with a higher interest rate than Full Doc Loans so are more expensive and may limit borrowing capacity.

Being self-employed can make the process of applying for a home loan somewhat more involved, but that doesn’t mean it has to be difficult. Having an experienced mortgage broker by your side means you can be guided through the process without fuss or stress.

For more information, contact the Blackburne Mortgage Broking team on 9429 5794.