Funding for self-employed opens up
There are encouraging signs that self-employed products are making a return, with a non-bank lender unveiling a new lite doc product.
Yesterday, Australian First Mortgage (AFM) launched its Complete Option self-employed lite doc loan.
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The loan has a maximum LVR of 80 per cent (LMI inclusive) and offers the refinancing of existing loans inclusive of cash out up to $10,000 to cover reasonable financing costs.
Low doc lending was one of the first casualties of the GFC, as funders deemed the sector too risky and consequently paired back significantly on no-doc and low-doc loans.
Research by Genworth Financial revealed a dramatic decline in the number of low doc loans issued last year, from 24 per cent in August 2008 to 8 per cent in August 2009.
AFM’s national director of sales and marketing Iain Forbes said that despite the decision by banks to pair back on lending to self-employed borrowers, demand for low-doc products remains high.
“There has always been a demand. While the banks continue to tighten their funding criteria, non-banks are stepping up to the plate in a bid to cater to this demand,” Mr Forbes said.
“Our new product opens up a great opportunity for brokers, because it is inevitable they would have quality self-employed borrowers that require a low-doc loan.
“We work for the broker and that has been our model from day one. We want to give brokers choice.”
