Low Doc Construction Loans

Must be constructed by licensed builder.

Documents needed:-

Accountant’s declaration

Building contract or construction tender

Stamped council approved plans

Project Specifications and schedule of finishes

Construction certificate  or building permit

Builder’s insurance

Builder’s risk insurance

Builder’s public risk insurance

For multi units:-

Low Doc development funding

Low Doc Loans cash out. New Low doc Laon Product will allow up to $250,000 cash out.

Product Highlights include;

• Maximum LVR of 75%;
• Maximum loan size $1m;
• Security must be in a Category 1 location and must have a building on it. (No vacant land);
• 12 months ABN – Supported by Accountants Declaration
• No Defaults, Mortgage Arrears or Bankrupt History;
• ATO debts ok;
• Non performing unsecured debts ok;
• Unlimited debt consolidation;
• Access to generous cash out (amounts up to $250k with stated purpose only / over $250k the borrower will need to supply a Stat Dec outlining purpose of funds).

Want to know more call us:-

1300 LOW DOC      1300 569 362

Interest rates for low doc loans for cars have been again reduced.  The rates have been reduced by another .25% This lowering of the rates is good news for small business owners. For all low doc car loans the vehicle must be used for business or commercial use.

To qualify for these low doc loans for cars the applicant must be either a sole trader, partnership or company. The small business owner must be ABN and gst registered for a minimum of two years. If you are a property owner it may be possible to do a vehicle no deposit low doc loan. For full details see page on Low Doc car Loans.

Low Doc Loans with No BAS and no accountants letter are still available. For this low doc loan an ABN for two years and gst registration for one year is required.

These low doc loans will require twelve months trading statements for the self employed entity that is generating the income.

Currently there is no application fee, no ongoing fee and no early repayment fee with these low doc loans.

Why are you being asked for bank trading statements for the business entity generating the income?

Because under the new NCCP  legislation we must make reasonable enquiries to verify a borrower’s financial situation and objectives.

As well as self certification, lenders have been asking for supporting information, such as:
• bank statements
• cash flow forecasts
• wages/income verification
• accountants verification, etc

For this particular loan BAS are not required. Instead, the bank trading statements are needed to show income going through the business entity.

As everyone is now aware, all residential lending is now governed under NCCP. This can only be a good thing going forward, as it will lead to even more responsible lending. Contrary, to what some media commentators are saying Low Doc Loans are not dead. The whole principal of lending is that borrowers should be able to repay their loan comfortably.

So what does this mean for low doc loans? It means any low doc loan must now be verified in one of three ways. Either bank trading statements, BAS or an accountant’s sign off only. Of these three, we have found the third option is the most popular. This makes sense, as many accountants have known their customers for a long time and are intimate with their businesses. So, if you are looking for a low doc loan, and have an accountant that is able to sign off on your declared income, please call us on 1300 LOW DOC

Low Doc Construction Loans

There is no question that funding for low doc loans has tightened. Having said that, to compensate for that tightening, during the month of September we have seen new sources of funding become available. We now have access to a new 65% product for low doc construction loans in the Sydney metropolitan area. It does not include credit impaired low doc loans.

Note:- Construction cannot have commenced

Development finance funding guidelines are as follows:-

Development Funding

Lender can consider funding for multi dwelling developments to a maximum amount of $5 million.

Basic criteria:

• Funding to lower of 80% of total development costs or 65% of Gross Realisation Value (both exclusive of GST)
• Fixed price building contract with registered builder, (the borrower can be the builder),
• Loan advanced progressively on a cost to complete basis against Valuer and Quantity Surveyor inspection reports.
• Interest capitalized within loan term
• Construction loan terms from 12 – 24 months. (interest only)
• Ongoing residual stock finance (take-out funding) considered on a case by case basis.
• Pre-sale requirements considered on a case by case basis.**

** No pre-sale requirements for developments falling within below criteria:

• up to 6 units.
• loans up to $1.5 million.

Below is a list of questions / information requirements which will assist in determining if a development scenario falls within the lendrs acceptance criteria:

• summary of the scenario (loan amount requested)
• Location of the security: actual street address
• Structure of the borrowing entity: trust, company individual etc (have sponsors undertaken developments in the past?)
• “As is” value i.e. Land purchase price / current market value
• Amount owing on the land if it is already held by the client
• What is the client building: no of units, is DA held? etc
• “On completion” value i.e. value of the property(s) upon completion of construction
• Will they be strata titled or held in one line;
• Value of the fixed price building contract
• Details of licensed builder (web site? / details of similar type construction projects undertaken)
• Exit strategy: do they plan to sell or retain (are there any pre-sales in place?)
• If they plan to retain – what is estimated market rental return
• Does the client have any CRA issues
• Any additional strengths or potential issues we should know about up front.

If you require a low doc construction loan, please call us for a competitive estimate on 1300 LOW DOC

Low doc Construction loans are still available for building residential homes in major metropolitan areas. An interest only low doc loan during construction.

At 60%, can be done at or near normal home loan rates.  The applicant must be an individual and there cannot be more than one building constructed.

A Low Doc Loan Construction at 80% can also be done, however there will be a slight loading due to the extra risk.

It is preferable to have stamped council approved plans and specifications, however if required the land only may be settled first.

Builder must be a major licensed major builder, have builders insurance and applicant must have clean credit.

For both of  these types of low doc loan need 2 years ABN and registered for GST. No BAS or trading statements required.

Building will be inspected at each stage of progressive drawdowns.

Call 1300 LOW DOC ( 1300 569 362) now to see if you qualify.

Low Doc Loans LVR change.

Westpac

The maximum LVR on Westpac Low Doc Loans will be reduced from 82% to 80%, effective Wednesday 20 January 2010.

This change will also apply to existing customers that have low doc loans that need to be re-originated as a result of a top up.

If a customer pays the mortgage insurance separately (or upfront) the total low doc loan amount will still be 80%

RAMS

RAMS Low Doc Loans will be a maximum of 80% including mortgage insurance from Thursday 21st January 2010

As a footnote to the above, Westpac and many of the major banks are now requiring BAS statements with their low doc loans. Given this requirement for BAS, is this really a low doc loan? There are still alternative low doc lenders out there at 80% for both purchases and refinances that do not need BAS.

What’s the difference? As a guide

Low Doc Loans can be on either owner occupied, or investment properties.
They require an income declaration.
Should have an ABN for 2 years and be registered for GST.
A normal LVR is 60% without mortgage insurance, and 80% with mortgage insurance.
Rates on low doc loans are either at, or near home loan rates.
Normally a term loan of 25-30 years.

No Doc Loans

Must be on investment properties.
Do not require an income declaration, however will still need Assets and Liabilities position.
Do not require ABN or GST registration.
Normal LVR is 65%, however in some cases can go to 80%.
Rates are priced according to risk and are more expensive than low doc loans.
No Doc Loans are normally short term up to 3 years, however in some cases it is possible to go out to 25 years.

The above is a guide only and can change at any time.

Low Doc Loans may be back with AOFM investment.

Up to 10 per cent of loans funded under the next planned round of $8 billion in investment may be low doc, though still secured over the borrower’s home….

Full article from The Sheet

Westpac low doc loans rise .45% after RBA only moved .25%. This move by Westpac is proof that banks do and will move low doc loan rates as they please. Often we hear from low doc loan customers that they are concerned the non banks may be more expensive.

This move by Westpac clearly dispels that argument.

Treasurer, Wayne Swan has been less than impressed with Westpac’s extra rate increase!

St George Low Doc Loans will go up  .39%

Citibank Low Doc Loans to increase .39%

CBA low doc loans will rise by .37%.

ANZ low doc loans to go up .35%

Bankwest low doc loans move .35%

The four major banks, CBA low doc loans, ANZ low doc loans, Westpac low doc loans, and St George low doc loans have all passed on the rate rise again, meaning the variable rates for low doc loans have risen by at least .25% again. This is on top of the .25% increase that occurred on Tuesday October 6 2009. Low doc loans have risen a total of .5% in the last two months. The next meeting of the Reserve bank is due for Tuesday December 1 2009. A media release normally occurs at about 2.30pm.

As the bank does not normally meet in January, the next meeting for the RBA after December 1 should 2 February 2010

With  banks and mortgage insurers, it is becoming more difficult to get Low Doc loans with credit defaults. We have seen the mortgage insurers refuse to insure low doc loans with any sort of default. These low doc loans are commonly called credit impaired  low doc loans. One of the main criteria looked at with these credit impaired low doc loans, is the size of the default and whether or not it has been paid, and when it was paid. Minor telco defaults, and defaults $1000 or under, for low doc loans may be looked at differently to larger unpaid defaults.

For low doc loans with larger defaults they are still available. As a guide these low doc loans, may be done for residential properties in major metropolitan areas and up to 80% of the value or purchase price.

For credit impaired low doc loans without BAS the following will also be required:-

The last 4 months bank statements for your business account, transaction account, and last personal bank account statement.

With credit impaired low doc loans each one is assessed on its merits.

Please call us on 1300 LOW DOC and we will let you know what pricing we can do for you.

With the large four banks increasing variable rates, Low Doc Loans are set to get more expensive. We are now also starting to see the emergence of two types of low doc loans. Low Doc loans with BAS statements and Low Doc Loans without BAS statements. Don’t be surprised if there is another rate increase for low doc loans before the end of the year.

We are also starting to see some lenders add a margin for the perceived increased risk of low doc loans.