Low Doc Loans Refinancing – How does it Work
Low doc loans are finance products that are generally offered to the consumers by a mortgage lender. The consumers of low doc loans are people who are self-employed, seasonal workers, unemployed or immigrants that are new to the country. Thus, it can be easily inferred that this type of loan is usually applicable for the consumers who don’t qualify for regular loan products or who don’t prefer to disclose their financial privacy. For people that took a low doc loan we are going to explain a few things about how to refinance a low doc loan.
Are You Eligible For a Refinance?
If you have an existing loan you can get it refinanced. However, there are various guidelines of lending process that may vary. The following are vital to become eligible for low doc loans refinancing:
- The borrowing sum has to be within 80% of the total value of the property.
- The credit history has to be clear.
- It is vital that, for the last six months, all payments have been made on time.
- Having an ABN is a must if an amount is borrowed that is more than 60% of the total value of the property.
- The purpose for borrowing should be business, personal or investments.
What Amount Can Be Borrowed?
The amount you can borrow and the documents required depend on your Loan to Value Ratio. LVR is the percentage of the property value that you are planning to borrow. The following will provide a clearer guideline on this regard:
- No BAS statements are required if you are going to have an LVR of 60% or less
- For an LVR 61% to 75% and a refinancing from a major lender, you’ll not need any BAS statements either.
- If your LVR value is 75% to 80%, you have to provide BAS statements. You can also submit an accountant’s letter if you don’t want to provide the BAS statement.
- At a rate of 80% LVR, the maximum amount that can be borrowed is $1,000,000
- At a rate of 60% LVR, $2.5 million of loan amount is available at maximum.
What Role Does Policy Play?
The policy behind these lending activities is sometimes very complex and affected by external factors. You need to take into consideration the following points before going for a low doc loans refinancing:
- Credit records and scoring
- GST registration
- Your industry
- Size and location of the security property
- Type of loan being refinanced
What Are The Interest Rates?
The interest rates depend on the level of negotiation and the expertise of the loan broker. Therefore, always remember to go for a broker who is experienced and can get you good rates. Keep it in mind that the interest rate depends on the LVR therefore, higher your LVR value, higher the interest rate. It is highly recommended that you check the interest status of your current loan before applying for a refinancing. Due to severe competition in the industry, interest rates have been fluctuating over the last few years and you need to see whether the interest you have is competitive. If you find better deals, you can always go for it.
Although many of the major lenders are not willing to provide low doc loans refinancing anymore, there are still players in the industry who are very much into this business. Just take a careful look around and you’ll find the perfect place to get it from!
Author bio:
Zac Grace is a tech, marketing and SEO blogger working in the IT industry for the past 7 years. His work mostly revolves around SEO, but his interests do not end there. This article was written with the kind help and resources from Freedom Loans. You can connect with Zac on Twitter and Google+.
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Category: Mortgage
