Are there really any major differences between low doc home loans and regular home loans? Aside from the usual requirements of lesser documentation, with a low doc home mortgage loan you will pay a somewhat higher interest rate than one on a regular one with full documentation. However, low doc home loans still have their advantages.
First of all, low doc home loans are more flexible. This means that the interest rate can be lowered as the amount is repaid every fortnightly or every quarter of the year. This also means that the repayment term can be extended, so that you can repay the amount over a longer period of time. With a regular loan the lender will generally require you to make your repayments on a fortnightly basis, which is inconvenient. You have to remember to make the repayments every month, or else you risk having your car impounded or having your home repossessed.
Another advantage of low doc home loans is that you do not have to provide all your documents to every lender. If you want a regular home loan, then you will have to provide the lender with your most recent bank statements. In case of low doc home loans, you can provide your bank statements or your credit report, which can be helpful in case you need to borrow more money later on. It is important to note that if you are still paying off a previous loan, all your bank statements will be considered as previous financial commitments, which may reduce your eligibility for future borrowing. The best thing to do is to start repaying what you owe as soon as possible.
Another advantage of low doc home loans is that they can save you money by reducing the processing time involved in receiving a loan. For self-employed borrowers, this means that you will receive your money faster, since the processing time is not affected. However, you should understand that in some cases, a low-doc mortgage can actually cost you more money than a regular one, due to the additional documentation that the lenders will require from you.
There are two types of low doc home loans – those that require no appraisal and those that require a valuation. Typically, mortgage companies ask for an appraisal when they offer a low doc home loans. This is because the appraiser can determine the value of your property using certain rules and formulas, which are widely available on the Internet. In general, these appraisals are used to calculate your net worth, which determines how much your property is worth. You will probably have to pay more for your low doc home loans if you have a high net worth. In general, a higher net worth will get you lower interest rates.
Another type of low doc home loans is the ones that require a valuation. This is generally used by private companies that are buying residential properties in an effort to resell them quickly. In this case, the company will determine the fair market value of the property before offering you a loan and will then include the appraised value with your repayments. This is the case when you get a mortgage with adjustable interest rates or balloon repayments. Although this option has its advantages – it can save you a lot of money when compared to the traditional mortgages – you may have to suffer from a lack of flexibility.
You may also be limited to low doc home loans that only offer you a small interest rate, which means that the amount you pay over the term of the loan is relatively low. However, this may limit the amount of money you can save in the long run. If you go for a balloon repayment plan, for example, you will usually end up paying for your loans over a longer period of time, even if your interest rates are low.
There are a lot of options available for low doc home loans. Your best bet is to research various lenders online. This can give you a good idea of what is available and the rate of interest offered. In some cases, you can even apply online for a loan. This helps you to compare different offers from different lenders and to choose the lender offering the lowest rate.