Understanding low doc home loans

by Vicky Edema
The Australian mortgage industry has matured considerably over the years and has started offering some of the best mortgage options to residential or commercial loan seekers. The old tag of the mortgage industry being too rigid and overall having a painful cumbersome loan process has been almost completely wiped out and a new trend has emerged which has seen a lot more home loans or mortgages being approved in a record amount of time.

It has never been better for the Australian consumer to apply for any kind of home loan or mortgage with the mortgage companies themselves making life much easier for the person applying for the loan. Mortgage consultants now go above and beyond helping their customers choose the right loan for themselves. Each type of loan is carefully explained and it is made sure that the consumers ultimately choose the loan that is best for his or her situation.

One of the options that most mortgage corporations in Australia offer to their customers is the low doc home loans option. This is a loan that has seen a lot of activity recently and is gaining popularity with consumers.

Low doc home loans are a mortgage or home loan where there is no requirement to verify your income. But all other documents are required as they are with any other type of home loan. This loan is ideally suited to self-employed individuals, contractors who are working independently and investors. This loan type also suits people with enough income but who don't want to waste time in bank verification and other time consuming processes. Borrowers should be aware that with low doc style loans a default or similar negative listing on your Credit Reference will make you ineligible for low doc finance.

A low doc home loan has an interest rate a little higher than normal types of loans and mortgages. This said, with some lenders the rate will reduce to their standard variable rate after say a 2 year period, provided you have meet all your interest payments on time. This loan is largely for those who want to buy investment properties, refinance their existing property and who do not have current taxation returns on their income. This normally prolongs standard investment loans. There are mainly three types of low doc home loans available.

NO RATIO LOANS: this loan is for those who don't want to declare their income before anyone. Hence, there is no debt for income ratio for the consideration of the loan lender. This type of loan can give a very quick and easy process for those who think that an income citation is going to be their worst nightmare while applying for a loan. As the lender is taking added risk by not requiring any verification of income they will generally not lend as much against the value of the security property.

NO DOC LOANS: for obtaining this loan, the 'no doc loan' requires the minimum number of documents and documentations. The loan lender goes through the loan request from the borrower with no financial documents at all and maximum privacy is given to these loan candidates as well.

STATED-INCOME (LOW DOC) LOANS: for someone whose income is fluctuating every day, week or month, the stated income loan is the best. But this type of loan requires the borrower to show his earnings for the minimum of two years initially and he also has to show tax returns and all other bank statements.

Although low doc loans obviously have appeal for those who perhaps don't have their financial documents in order or have privacy concerns, those who have low incomes that would not be sufficient to qualify for a standard variable rate loan, should not resort to overstating income on a low doc application in order to borrow. Lending guidelines are there to protect both the lender and the borrower - defaults traumatic for both parties and a mortgagee sale is almost inevitable if income is grossly overstated, particularly when the borrower is already under financial stress.

By consulting with your experienced mortgage lender you can find out whether low doc home loans are a good option for you. They are in the best position to check which type of loan is best for you and make your life that much easier.


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What are the secrets of Home Mortgage Refinance

by Alan Lim
Why do you want to Refinance your home mortgage loan? The primary reason is that home mortgage refinancing could save you a lot on your payment. In addition, it also allow you to pay off the full home mortgage faster.

If you're planning to refinance your home mortgage loan, below are some important things which you need to consider in order to make sure it will not cause any problems in the future:

* Find out the terms of your original home mortgage loan Before looking for a suitable home mortgage refinance, make sure that your original home mortgage loan does not have pre-payment penalties or any kind of early payoff penalty.

Many people do not know when they refinance their home mortgage loan, they maybe be charged for a pre-payment penalty. These penalties can range from six months up to three years, plus another penalty for early payoff.

So in order to justify a home mortgage refinance, you need to have significant interest savings.

* Access different lenders options Apply for pre-approvals to several different lenders in order to ensure you're getting the lowest rate in the market. However, make sure that the lender is not pulling out your credit history during an initial pre-approval application. This is because if your credit history has too many inquiries, this may prevent you from refinancing your mortgage loan with a low rate.

In addition, assess different lender offers concerning interest rate offerings and closing costs. This will largely affect your lender choice. Choose a lender with feasible rates to maximize your home mortgage refinance benefits.

* Choose the best lender After comparing different lenders, you can then allow your choice of lender to pull your credit history. Then, make sure to get the interest rates and closing costs into writing and also get a quotation in advance of all possible costs involved with your new home mortgage loan.

Finally, remember to ask for information whether the new home mortgage loan you will be getting has any pre-payment penalties. Most lenders leave this important information out, knowing they might scare consumers away.

In considering a home mortgage refinance, make sure you search around and assess different lending options. Do not jump on the first opportunity that comes before you. Be a smart consumer and refinance your home mortgage loan with the lowest rate possible.

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