I was just talking to a lender and he said he would process my application as a lo-doc. Is there any downside to this? I am happy to be income-verified as we have solid income to cover the mortgage. he said they are doing lo-doc because we have enough equity in the property and don't need to verify income, plus interest rates are the same whether processing application as lo-doc or not.
To me, lo-doc is like the cause of sub-prime and it just has a "negative" feel to it, although i may have been completely misled and have no clue what lo-doc really is.
thanks!
JR
If you can go full doc then do so as dependant on the LVR you may find that the loan is mortgage insured if processed under a lodoc loan.
There are a few other disadvantages so push that route.
If they say NO then look for an alternative lender.
Richard Taylor | Australia's leading private lender
yeah, probably LMI is the major downside, but another is higher exit fees.
The sub-prime crisis wasn't caused by Low Docs, but by American lenders lending to credit impaired people on a low doc basis with low honey moon type rates. The problems began when the rates jumped and the borrowers couldn't afford to repay and just handed their properties back to the lenders resulting in rapid price decreases in property.
in Australia with Low Doc loans, the majority require squeaky clean credit history.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I can't think of a mainstream lender that would directly recommend a course like this. In fact, most credit guidelines recommend doing all you can to try and ensure lo-docs are not used if income can be verified. Clarify it, go full doc, or go elsewhere. Totally agree with the above comments. All the best.
ok, thanks for the input. i will just tell the guy we want to do full-doc.
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