what is a low documentation loan or low doc loan

What is a Low Doc Loan?

Low Documentation (Low Doc)

If you are self-employed and you do not possessed 2 years of tax return and financials to assess your income for a home loan, there are alternative ways to assess them such as using “Low Doc”. Money Smart defines a Low Doc loan as “a loan that requires less financial documentation to prove income, assets and liabilities than a standard loan”.

Who is it for?

If you are self-employed, have your own ABN, and been running your own business for a minimum of 12 months, you may be eligible in using Low Doc to assess your income.

So rather than providing 2 years of tax returns, business and personal financial documents as evidence of income, you can provide the following documents.

If your business is GST registered, you will need to submit your latest 2 BAS (business activity statement). A BAS statement reports how much you have made and how much GST you have paid for the period of your business activity.

The second way to obtain income would be to get your accountant to confirm how much you have earned for the year.

The last method would be to submit a 6-month business statement that shows your income and expenses. This statement will help to validate your business’s cashflow.

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