Everyone is not fortunate enough to spend some part of their savings and monthly income building their dream home. Financial constraints are one of the main obstacles to owning a home. Again, many people do not have enough documents to prove their income, and they cannot get a loan from a bank. Self-employed people may not produce their income certificates to get a home loan. In this case, they can apply for a low doc building loan.
However, every cloud has a silver lining, and some best financial institutions offer low doc building loans. It is tailor-made for individuals who are unable to provide their financial statements and tax records. Self-employed individuals or people in the soft salary bracket fall in this category. They are unable to file their tax returns on time.
People who avail of low doc building loan
Borrowers who have some assets and some source of income but do not have proper documents to prove their income can choose the low doc building loans. Again, people who have not completed their income tax returns for a previous couple of years or people with uncertain yearly income can apply for this type of loan. One can provide the BAS or Business Activity Statement and get the loan if they are freelancers, self-employed, or work in any unorganized sector. So now, you can build your dream home without submitting too many documents, and you can search such lenders online to avail yourself of a low doc home loan.
How would you apply for a low doc building loan?
While applying for the low doc building loan, the borrower must follow the self-verification process that reflects their income. They have to mention their source of income and sign a declaration to get the loan. Often, one has to add the BAS statement to support their application to avail of this loan. One of the significant advantages is that anyone who works as a freelancer or has just started some business can get this loan without proof of income. As a supporting document, they can provide their bank statement.
Apart from the BAS statement, one has to do the self-verification of their income and sign a declaration form. One might also require submitting the registered trade or business name or the ABN name. Attaching a bank statement for a particular period before applying for the low doc building loan is also needed. Apart from submitting the GST details, if any, one has to submit a letter issued by an accountant that clarifies the borrower’s financial condition.
After finding the lender providing a low doc building loan, one must gauge all the pros and cons before applying for such a loan. It is essential to talk with an accountant to know all the financial details, and you must improve your credit score before applying for the loan. Wrong statements can lead to tax troubles in the future.
Many financial institutions offering this type of loan ask for LMI or Lenders Mortgage Insurance if the borrowings are over 60% of the overall budget. One may have to pay more interest rates while getting this type of loan. In this regard, you can search for such lenders and check their interest rates. Then you can compare their charges to choose the best deal. If needed, then you can hire a broker for your loan.
One should always provide correct statements and supporting documents while taking low doc building loans so that the lender can offer the best solutions. Many financial institutions offer this type of loan, and one should take advantage after gauging all pros and cons of such low doc building loans.