A low-document loan (or lo-doc loan for short) caters mainly for self-employed borrowers who are unable to provide full financial statements and other evidence of their income.

There is a range of lo-doc products on the market with many lenders offering standard and premium lo-doc loans with the choice of fixed or variable interest rates. Borrowers also get access to a range of loan features and options never previously available.

However, most lenders require lo-doc borrowers to take out lenders’ mortgage insurance when borrowing more than 60% and up to 80% of the property value. Some lenders also charge a higher interest rate for these products. These rates may be reduced after a certain time period or when you are able to provide tax returns/income evidence.

The challenge is to find the best loan with the best features for your particular circumstances. That’s where our team of experts can help.

At a glance

• less paperwork – requires self or Accountant certification instead of traditional proof of income
• streamlined application process
• can only borrow up to 80 per cent of property value
• interest rate discounts may apply after specific time period
• may be eligible for lower interest rate if able to supply tax returns at a later date
• usually requires clean credit history
• lenders may not lend in high risk areas such as inner city high-rises or large rural allotments
• generally higher interest rates, sometimes with less features than a traditional loan
• may require lender’s mortgage insurance, adding to cost of loan