Promoted by Blue Ink Finance.
When you think about it, a self-employed person is often really busy running their business, looking after staff (where applicable), endeavouring to juggle the cash flow and ensure that all the accounts are kept up to date. Then there’s the concern of looking after customers, generating new business or spending time with marketing opportunities so that the money keeps coming in.
Whether you own a cafe or you are a house painter and decorator, we often hear of busy self-employed people juggling 10 things at a time to keep things moving.
Then life happens!
…and all of a sudden, the self-employed business owner wants to buy a house or invest in a property. While trying to fit everything in, often we see that tax returns are the last thing on their mind.
This is where Loc-doc loans come in. Low-doc loans are somewhat back in vogue, as they are a lot easier to come by than what they were a few years ago.
Loan-doc loans are for self-employed people that simply don’t have their tax returns up to date. In the old days, you were able to go to a low-doc loan, just by signing a form, but these days you've got to provide a lot more information.
Bank statements are usually what lenders want to see as evidence that your company or business has in fact earned what you're declaring. In addition to this, they often require a letter from your accountant and or BAS statements to demonstrate that you are earning an income.
So, if for example you haven't gotten around to lodging your tax returns for whatever reason, a low-doc loan can be a good solution for somebody who is legitimately earning income.
Generally, most lenders will have a product suite that includes a low-doc option. Generally, low-doc products are capped at 80% LVR, and there may be a mortgage insurance fee between 60% and 80% rather than 80% onwards with normal lending.
Interest rates and charges do vary depending on how long you have been self-employed.
If you have just started a business and if you've been in business for less than two years, but more than 12 months, then there are different lending products available for you. However, for those people that have been in business for less than 12 months, there are limited products, and the pricing structure will most likely be higher than normal lending.
Even with the limitations and other fees, it sometimes still works out profitable for the self-employed person even with all the higher finance charges.
If somebody wants to get into a property and doesn't want to wait twelve months or 6 months, there may be profit in that property or reasons why, maybe they're moving to a new house and need to settle on something quickly and so they're prepared to take a higher rate or fees for their convenience.
In reality, a low-doc loan is a convenience product. It's there for legitimate self-employed people that are earning money, but for whatever reason can't get the tax returns.
If you are self-employed and in the market for a property or looking to get some additional cash out, Blue Ink finance can go through your previous tax returns and your current draft financials and give you a clear and complete understanding of your capacity which can enable you to make an informed decision whether or not a low doc loan is the right product for you.
Using detailed analysis tools Blue Ink Finance can break down your tax returns highlighting which expenses and income specifically will be reviewed by the banks. This is where the specialist knowledge supports you as this information is viewed differently across the different lenders.
Being an award-winning Mortgage Broker with nearly 20 years’ experience in the finance industry my team from Blue Ink Finance and I are perfectly positioned to be your “go to” people when you need help with your finances.
Additionally as property investors, we understand the best way to getting the banks to saying ‘yes’ more often. We’ve helped many investors overcome the financial brick wall AND/OR invest when there seems to be no way forward… why not YOU?
About The Author
Blue Ink Finance
Who I am, and why I want to help you succeed.
As an award-winning Mortgage Broker with nearly 20 years’ experience in the finance industry, I’ve seen it all.
I’ve gone through constant industry changes and yet I still successfully help my customers borrow the money they need to get ahead.
As a Finance Coach, my goal is to help you understand your financial potential so that you can borrow with confidence.