Every person has a dream to one day become a home owner but unfortunately, not every person is able to provide the required W2 forms, pay-stubs and more documents that your lender may require you to submit before qualifying you for a loan simply because you are a business owner and not a salaried employee. The thing is that a lender asking you for all these documents is usually a good sign. A great one actually since by asking those questions, a lender is actually trying to figure out the best mortgage loan you can qualify for. However, if you are unable to provide the documentation needed for a loan, then a low doc mortgage becomes a very attractive option for you.
You may be wondering why a person with an income might prefer a low documentation loan rather than a traditional loan. Well the main reason is that self-employed people prefer showing lower income for tax purposes but this simple act is not so viable when it comes to loan application. Apart from this, young workers who have no or low wage history as well as new business owners who cannot show a history of consistent earnings also qualify for low doc loans because with traditional loans, several years' worth of earnings is usually requires. Other reasons people may require a low doc loan is if an individual is a retiree living on an investment income and also the fact that finding and organising documentation can be a difficult task for anyone. Even people with bad credit stand a chance at accessing a low doc mortgage, business or even commercial loan which makes a low documentation loans quite popular. However, it is still important to maintain a good credit score if you intend on getting a loan or mortgage any time soon.
There are a number of features available on a low doc mortgage loan that ensure that you better manage your finances and pay off your debt sooner than later, for starters your mortgage loan may have options to have additional payments without incurring additional costs, visit this page for more information. Some low doc lenders limit the number of payments customers can make or charge a fee for this.
Interest only repayments: This allows you to make payments on the amount borrowed for a period of time rather than the principal of the loan.
Flexible rates: Some providers allow you to choose between a fixed rate and a variable one or even split your loan to be able to access different interest rate configurations.
Offset accounts: This means that you can use your excess accounts to offset the principal of the loan.
If you are a looking at taking out a private mortgage loan, you should know that third party guarantees, introductory rates and such are not services that lenders offer when taking out a private loan due to the fact that a private mortgage loan is generally considered high risk enough as it is, click here to find out more.
Therefore, offering these services is going to only make them more expensive since the lender would want to cover their bases and doing so would defeat the purpose of having a low doc loan in the first place.
All you need for your loan to be approved is:
- Not to overstate your income.
- Provide a clean credit history.
- Work out how much you need to borrow.
- Demonstrate a good asset to income ratio and
- Ensure your paperwork is in order.
With the above listed in place, you should be on your way to owning your home sooner than you thought.