Low doc refinance options

Moving an existing loan to a low doc lender with a better rate or product, with no increase in the loan, is the simplest low doc refinance. The lender verifies income from BAS or statements, values the property and checks the conduct of the existing loan for the last six to twelve months. Clean conduct matters more on low doc than on full doc because the lender is relying on it as evidence of capacity.

Borrowers who took a specialist or near-prime loan because of a default, a tax debt or a short trading history often refinance on low doc once the problem has passed but before two years of returns exist. The low doc lender wants the original issue resolved, clean repayments since, and BAS supporting the income. The rate improvement over a specialist loan can be substantial.

Debt consolidation is accepted by most low doc lenders within a dollar cap and an 80 per cent LVR, with the debts paid out at settlement. Cash out for investment or business purposes is accepted at lower LVRs with evidence. Cash out for personal purposes is rarely available. Tax debt payout is accepted by specialist low doc lenders with the ATO statement.

Low doc refinances should be structured with a return to full doc in mind: variable rate or short fixed terms, no heavy exit fees, and a note of when the next return will be lodged. A specialist will often refinance to low doc now and diarise the full doc refinance for twelve months later, which produces the best blended cost over the period.