Lay Low With St George's Low Doc Loans

Self employed? You may have an income and assets but you don't always have the necessary paperwork to qualify for a standard home loan. A Low Doc home loan could be the answer, but be sure to shop around. Short for low documentation, a Low Doc loan means you can self-verify your loan by providing a signed declaration of your income, without the need for statements and pay-slips.

St George offer Low Doc options on their Portfolio Loan, Variable Rate Home Loan and Fixed Rate Home Loan products. Eligible homebuyers can borrow between $10,000 and $1.5million.

The Low Doc loan options offered by St George could appeal to borrowers who are self-employed, or have their personal and business income and expense records combined. The St George Low Doc Home Loans are available for both business and personal borrowers and can be used for a number of purposes.

The cost of a Low Doc loan is generally higher than other loan types, as less documentation means more risk for the bank. The St George Low Doc options carry an application fee of $750, a settlement fee of $100 and a $12 monthly account service fee.

Low Doc loans such as the St George options usually offer fewer features and have more restrictions than standard loans. A redraw facility is permitted with the St George Low Doc products, but is subject to the bank's approval and will carry a $25 fee per transaction for written requests, or $10 per phone banking or internet request.

Borrowers choosing St George Low Doc loan options can borrow a maximum of 80% of the value of their property, but Lenders Mortgage Insurance is required for any of their Low Doc loans that are greater than 60% of the property's value. This means that the St George's Low Doc borrowers must be able to cover the added cost of Lenders Mortgage Insurance, or have significant savings for a deposit to keep their Loan to Valuation Rate below 60%.

If you do decide to apply for a Low Doc loan, be honest when it comes to declaring your earnings. If you declare more income than you really make, you could be in hot water later if you are audited by the Australian Tax Office.

When exploring your home loan options, always read the fine print to learn about any limitations that a Low Doc home loan may put on your finances in the future.