Are commercial low doc loans available?
Yes! Commercial low doc loans are available for commercial and Industrial property purchases. It is worth noting that whilst only a handful of lenders accept them, they can be found with some large institutions and some smaller institutions.
Many lenders who consider commercial low doc loans will lend between 60 – 82% LVR.
Some lenders only ask for an income declaration from the borrower, and other lenders verify the income declaration by either looking at the cash entering the business trading account or a supporting letter from an accountant.
Who can obtain a commercial low doc loan?
Generally speaking, low doc loans are for self employed people with either an active ABN or an active company. These are people who cannot verify their income or produce their financial statements.
Other reasons where one will seek a commercial low doc loan is:
- Where a borrower’s financial statements are too complex to verify income streams
- Too many paper write-off expenses like depreciation, and
- Large amounts of cash income for the business not necessarily reflective in a borrower’s financials.
There are a few lenders who do commercial low doc loans, and their requirements differ from one to another. Our brokers are commercial low doc experts. These loans account for approximately 11% of all loans generated at Mortgage Providers.
Are commercial low doc loans more expensive?
- As a general rule, many low doc commercial loan lenders offer pricing dependent on the LVR. The lower the LVR, the lower the interest rate applicable.
- Some lenders who specialize in commercial low doc loans offer some very competitive interest. So much so, that the interest rates which are offered are the same price as full doc loans. This is generally achieved for most good quality borrowers.
What is the maximum LVR for a commercial low doc loan?
- This is dependent on the lender.
- Most commercial low doc lenders will lend to a maximum of 65% LVR.
- A few commercial low doc lenders will lend to 70% LVR with one lender even going as high as 82% LVR. Best of all, the commercial low doc rates at 82% LVR are the same as normal full doc rates.
What are the requirements for a commercial low doc loan?
The criterion differs from lender to lender. However, it is possible to get a commercial low doc loan for:
If I had bad credit, can I still get a commercial low doc loan?
Yes, if a borrower has had bad credit then it is still possible to get a commercial low doc loan. This will restrict the amount of lenders which can be used, but this is possible with 80% LVR.
What type of documentation is required for a commercial low doc loan?
Documentation may differ from lender to lender but generally, you may be asked to provide the following:
- An Active ABN
- An Income Declaration which the lender will use to determine affordability of the borrower
- Business Activity Statements (BAS’s) to evidence the income being declared. Using this method, the lenders take 40% of the business turn over as income.
A few commercial low doc lenders view the turnover of a borrower’s business. Using this policy, they assume the total turnover of the business income at 40%.
What types of properties can I use to secure a commercial low doc loan?
Most property types can be used as security for a commercial low doc loan. These include:
What types of borrowers are acceptable with Commercial low doc lenders?
All types of borrowers are acceptable Commercial low doc lenders. These include:
- Personal / individual name
- Company name
- Business name
- Trust name
- Partnership names
- Or a combination mix of any of the above
At Mortgage Providers we have access to commercial low doc lenders which are either banks, or major financial institutions. Further, we know the policies of all the different lenders and know how to present a loan to a lender giving the client the same interest rate as a full doc loan which could save thousand for the borrower.