What is a low doc loan?
06 May 2023
A low doc loan, also known as a low documentation loan, is a type of loan that is specially designed for self-employed individuals or small business owners who may be challenged in providing the traditional documentation, such as tax returns to prove their income. Instead of requiring a full set of financial documents, low doc loans typically only require a borrower to provide proof of income, such as a letter from an accountant or bank statements.
Low doc loans are most suited for:
- Self-employed individuals or sole traders: Self-employed individuals may have difficulty providing the necessary traditional documents to prove their income, making low doc loans an attractive option.
- Small business owners: Small business owners may also have trouble providing traditional documentation to prove their income, especially if their business is new or not yet profitable.
- Borrowers with significant assets: low doc loans can require a higher down payment or collateral, so it’s more suited for borrowers with significant assets.
- Borrowers who can provide alternative documentation: Low doc loans may accept alternative documentation link bank statements, profit and loss statements and a letter from an accountant.
Please also note that low doc loans are seen to be higher risk for lenders, so they may also require higher interest rates, Larger down payments, or more collateral compared to other traditional loans, and also not seen as widely available. WizWealth Finance has a team of loan specialists for low doc loans and can assist you find a competitive low doc solution.
