A No Doc Or Low Doc Home Loan. What It Is?

A "Lo Doc" or sometimes call "Lo Doc Home loan" are mortgage or home loans where documentation for verification of your income is not necessary. However, all other documentation is.

These loans are ideally suited to self-employed, independent contractors, investors, credit rating impaired, ex-bankrupt or clients with arrears on current mortgages and borrowers who have been refused by conventional lenders. Including people with suitable incomes but to meet bank verification takes valuable times and money.

Low Doc Home Loans (Low Document) are usually slightly more expensive than traditional loans due to the higher risk profile.

This is mainly for people who are looking to purchase investment properties, residential or refinance existing housing property and don’t have PAYG or current taxation returns confirming their income, which normally sustains a standard investment loan.

There are 3 main types of Low Doc or No Document Loans.

No Ratio Loans
These loans are for lenders who may not wish to disclose their incomes, Thus there is no debt to income ratios for the lender to consider. Good credit and abundant assets the No Ratio borrower has makes up for the lender not considering the borrower’s income information. If gathering income documentation's is going to be a logistical nightmare, then this loan can offer a quick and simple process.

No Doc Loans
To get credit the No Doc loans needs the least amount of documentation. The lender evaluates your loan request with the minimal amount of financial information from the lender and maximum privacy is assured.

Stated-Income (Low Doc) Loans
If your income fluctuates week to week, month to month, the Stated-Income, or Low Doc loans are the most attractive. However unlike the No Doc Loans, the Low Doc Loan does require the lender to disclose earnings, usually for two years, and might need to show tax returns and bank statements.

If you think a No Doc or Low Doc loan is right for your situation, talk to a mortgage expert. It might be beneficial for you to pay a higher rate for this loan. A good mortgage banker can also show you how to obtain the necessary documentation.

Another Mortgages and Loans Tip

How To Remove Bad Credit Home Equity Loan

The number one reason why some homeowners have difficulty getting a home equity loan is because of bad credit. In my company, we called it bad credit home equity loan.


If you have bad credit and is trying to repair your credit score, it helps to understand how credit score is tabulated and the factors going into credit score.


Credit score or FICO is created by Fair Isaac Corporation. It is a value that is used widely by many lenders to determine the interest rate that you will be charged as the homeowner. The credit score value range from 300 to 850. The lower your credit score, the higher your interest payment will be. Bad credit home equity loan applicants usually have a credit score lower than 600.


Your credit score is really like your financial score sheet detailing every major transaction you have with the lenders. So who keep tracks of your credit score? In the united states, it is done by the three major financial institutions namely Transunion, Equifax and Experian.


The factors that they take into consideration when determining your credit score are the amount of money you owed to banks, lenders etc. The length and type of loan. For example, your credit card loan. Your history of whether you have paid your monthly loan or interest on time. The assets under your name. Examples are houses and cars. If you have a job, it also factors in your monthly salary.


Do note that your credit score may not be accurate from time to time. In fact, according to a recent survey, up to eighty percent of all credit scores are incorrect. I personally think it is not that high but there are cases where a person’s credit score is unusually low even when they have a pretty good credit record and no outstanding loan owed.


If you think this is happening to you, you can question the credit score with the three major financial institutions I mentioned earlier.


What about for married couples applying for a home equity loan? The credit score is determined from the person with the most sizable income.


So in general, if you know you are going to apply for a home equity loan and has a bad credit, try to clear your current loans first. This will help to improve your credit rating. Another method you can use is to get a loan consolidation plan. By doing so, you are effectively paying up the previous loans and getting a new loan, therefore usually your credit score will increase