Refinance Your Low Doc Loan

2010 April 21
by iggy

You may have a gotten a low doc loan for your home for several reasons.  Among the common reasons are you were in bad debt, or had a bad credit rating; you may have just started your business, and cannot provide the financial documents necessary for a lower interest loan, you work an unusual job that does not have the necessary payslips and receipts.  To make a long story short, you do not have enough documentary proof to show that you can make the loan repayments regularly.

This has led to the creation of a low doc or no doc loan.  These loans require little to minimal submission of documents.  This means that it is possible to get a loan even if you do not have documents to support your source of income.  More often than not, a self-assessment is made, and based on that self assessment the bank or lender will decide how much of a loan to give you.  Banks and lenders are taking a huge risk in accepting your loan application for a low doc loan.  This often leads to interest rates that are set higher than usual to make up for the unnecessary risk.  Where the LVR or loan to value ratio is set above 80% the costs rise even higher as one has to expect to pay LMI in addition to the regular mortgage payments.

The costs of these low doc loans vary greatly depending on the lender or bank who provided you with the low doc loan.  The interest rates also fluctuate depending on the time you got the loan.  There are times where interest rates are high, while at other times interest rates should be low.  The first thing to do now is to check the prevailing low doc rates at different banks then compare that rate with the rate that you are paying now.  Please note that rates vary greatly depending on the bank or lender.

The home loan experts can provide accurate advice on this.  They have access to numerous banks or lenders offering low doc loan refinancing.  They can help you choose the package best suited to your situation or even say that you do not need to refinance if your existing loan is already made at a reasonable rates.

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