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Wed, Feb 25th - 12:31AM

The Complete Low Doc Home Loan Guide

I am a self-employed tradesperson running my own small business. Is it possible for me to get a home loan?

- Tradie

Hi Tradie,

We understand fully that it is not always easy for a self-employed small business owner to obtain a conventional home loan. We also appreciate that this situation is further complicated by the vast amount of financial information you are required to provide to a lender/credit provider. To help you get a home loan, specialised lenders/credit providers have developed a loan package called "Low Doc" home loans (also known throughout the finance industry as “Low Documentation" loans).

If you are a self-employed business owner like Tradie or you do not have adequate financial documents for any reason, you can apply for low doc home finance and buy your dream home. Before you apply for the loan program, understand everything about the loan package. It will help you in choosing the best financial solution.

Suitability

Low doc home loans have allowed thousands of Australians who, for various reasons, have been rejected by mainstream lenders/credit providers, to access a home loan.

A low doc home loan is specifically suitable for people who have assets as well as income, but cannot provide a financial statement or tax return as documented evidence of income, for example:

• Self-employed people who may only pay themselves a standard wage and run their business in a way that means they fall into a lower tax bracket to avoid income tax

• Property investors who may have varied income from month to month and from year to year

• Contractors and seasoned workers who don't work regular jobs, and

• New Australians families who have just moved to Australia and may not have pay slips or tax returns from the work they have been doing since they arrived in Australia

Income Verification Process

A low doc home loan enables you to self-certify your income, where you state your income (i.e. what you make) on the "Declaration" document. And, the lender/credit provider will not verify your income by using masses of documentation otherwise required, such as, tax returns, BAS statements and more.

Restrictions

The conditions for low doc home loans are more restrictive than standard residential home loans as they provide a higher level of risk to the lender/credit provider, for example:

• You cannot borrow more than 80% of the value of the security property, and

• Any Low Doc home loan with a Loan-to-Value Ratio (LVR) higher than 60% will incur a Lenders Mortgage Insurance (LMI) premium

What Factors Determine the Interest Rate for Low Doc Home Loans?

Some of the factors that lenders/credit providers consider in determining the interest rates include:

• At least 20% deposit (i.e. you do not have to show evidence of savings)

• Nature of and the security property type

• Client credit history

• Loan size amount

• Aggregate of total exposure to the lender / credit provider

• If self-employed, the period the client has been in business

• Age of borrowers, and

• The purpose of seeking finance

Why Choose Singh Finance?

As with any financial decision you have to make, take advantage of our professionally qualified finance brokers who have a thorough knowledge of the credit policies and standard requirements for low doc home loans. As they liaise with the specialised lenders/credit providers on a regular daily basis, our finance experts will save your valuable time trying to source the right low doc home loan and will arrange a pre-approval for you.

Singh Finance is a reputed finance brokerage firm in Australia. The firm has a team of expert and professionally qualified finance brokers who will leave no stone unturned in obtaining a low deposit home loan for you. The team will even help you in finding suitable non-conforming home loans for people with bad credit. So, don’t worry if you have discharged bankruptcy or default credit. Call on 0424 190 908 today.


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Wed, Feb 25th - 12:31AM

Caveat Loans are a Boon for every Business Owner

Specialised lenders/credit providers can solve the cash flow problem of business owners with the help of a caveat loan. The loan is ideal for business owners because:

>> Bank style credit approvals are not required

>> Tax returns are not required

>> No credit checks are undertaken on your credit history as bad credit history is not relevant

Interestingly, a caveat loan is not only right for a business owner but it can also be beneficial to a property developer or an investor.

Caveat Loans - Definition

They are fast settling loans, which are structured for a short-term of usually between 1 to 12 months, with a possible rollover (if required).

In contrast to conventional forms of finance, caveat loans need to be established quickly (i.e. within 24 hours from the time the application is first lodged).

How does a Caveat Loan work?

These loans are simply an 'asset lend.' For caveat loans (sometimes referred to as a short-term 2nd mortgage), all you need is to be the owner of a piece of real estate. Here is a list of residential, commercial, industrial or specialised securities that the loans are commonly secured against:

>> A home or a unit

>> Vacant land

>> Medical centres

>> Child care centres

>> Commercial properties

>> Rural land, farmland or agricultural land

>> Acreage (with no limit), etc.

How are Caveat Loans Structured?

>> They are structured just for a short-term of 1 to 12 months period

>> They generally have a five day "fast-settlement"

What is the Loan Exit Strategy and how are Caveat Loans Repaid?

The loan exit strategy is where the borrower agrees to pay the loan back to the lender/credit provider at a predetermined time (usually between 1 to 12 months).

The repayment of the loan can be done by one of the following methods:

>> You can refinance the loan

>> You can sell the asset

>> You can use any business cash flow or commissions due to you

What Other Reasons do Business People Choose for obtaining Caveat Loans?

Here is a list of many reasons (scenarios) why business people choose the loan:

>> A common use of the caveat loan is if business people require funds for bridging between the selling of a property and the funding of an urgent requirement;

>> Having the required cash flow in hand by way of the loan has helped many business people to pay off their debts and thereby enabling them to go on with the running of their business;

>> It may be that business people want to expand their business, and they need additional funds to enable them to fulfil their business goals;

>> They may want to attend an auction and the need to transfer the funds right after the auction ends; or

>> They may simply have a business deal that is too good to let go, and they currently do not have the required cash to pursue this business deal.

So, now you know how caveat loans can help you. More importantly, you also know that the loans can help you with any unexpected urgent commercial debts that you have to pay before any legal process is taken against you (e.g. default or court judgement) or before you are charged with late fees.

Singh Finance helps business owners in securing finance for their business. The firm's expert finance brokers will help you in securing fast caveat loans as well as help you in obtaining low rate equipment finance for business and short-term business loans. Call on 0424 190 908 or enquire online now.


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