Within the last few years, low doc home loans have been the source of a fierce debate. Some believe these loans shouldn’t exist because they don’t offer real value to lenders. Others would disagree. The reality is that low documentation home loans are there for those who do not qualify for a traditional mortgage. The loans work the same as a standard one but require different types of documentation for approval. While these are different loans, they do offer lenders the same goal – the ability to purchase a home.
So, how can you get a low documentation loan for your property?
Find Specialist Lenders
Some loans are harder to find on the mainstream market which means you have to find a specialist lender. Often, banks and mortgage lenders can point you in the right direction. Most will offer these as an alternative to potential borrowers. So, you have to do your homework to find a good lender. A low doc home loan can be affordable but you must find the right lender. This is not something to rush into. You should take time to search for a lender that offers something of real value.
Get to Know Requirements
Every lender is different. Some will be more flexible than others. Unfortunately, not all lenders follow the same rules or guidelines. Some will need you to meet the basic requirements while others want you to go slightly further. That is why you need to learn about such things. When you’ve found a lender, take time to learn about their loan requirements. It will allow you to get in the right position before applying for low doc home loans, otherwise, your application can be rejected.
Sort Out Your Credit (If Possible)
A lot of people think credit scores don’t matter when it comes to getting a loan but that’s totally untrue. If you’re looking for a low doc home loan, you need to have a good credit score to qualify. Remember, lenders are looking for good risks – borrowers they believe will fulfil the terms of the loan. So, you need to clean up your credit where possible. This can make a big difference when it comes to loan approval, so do what you can if you’re serious about a low documentation loan.
Have Extra Funds on Hand
Lenders want to see borrowers that are good risks and it means you have to be in a fairly strong position. For example, most lenders want to see you have money set aside for the deposit, along with closing costs. Lenders, however, also need to know you have sufficient savings in the bank. Ideally, you need around a year’s worth of savings. While this might seem like a lot of money, it can help secure low doc home loans.
Get Ready for the Lender
A low documentation home loan is a great option to consider when you aren’t in regular employment or are self-employed. Traditional mortgage loans might be out of your reach which means you have to consider the alternatives. A low doc loan can be great and cost-effective. You do need to have a deposit, sufficient savings in the bank, and good credit. You should also research the lender and get familiar with their requirements. A low doc home loan isn’t as scary as it sounds. Read more.