Low doc investment property loans

The lender turns BAS turnover into assessable income with an industry margin, adds 75 to 80 per cent of the expected rent, and assesses the new loan and existing debts at the buffered rate. Because the rent is real and evidenced by the valuer, an investment purchase on low doc is sometimes easier to service than an owner-occupied one. Existing investment properties are assessed on their rental statements the same way.

Twelve months of ABN and GST registration, six to twelve months of lodged BAS or business bank statements, clean conduct on existing loans, the contract of sale and the valuation with a market rent figure, and a deposit or equity of 20 to 30 per cent. Some low doc lenders limit the number of investment properties they will fund for one borrower, and some cap total exposure.

Rate: low doc investment rates run a quarter to one point above full doc. LVR: 80 per cent is the ceiling and 70 to 75 is common for investment. Purpose: cash out from the investment property is restricted. Lenders: fewer, and mostly non-bank. Against that, the loan exists, which for a minimised self-employed investor it often would not on full doc.

Investors who rely on low doc plan the sequence: buy on low doc, hold, refinance to full doc when the returns catch up, release equity, buy the next one. Spreading across lenders preserves capacity. And keeping the accountant in the loop about the borrowing plan avoids the situation where the return is minimised the year the investor most needs it to show income.