We are in a situation where we want to start a portfolio by buying an affordable investment property but are looking at the best loan possible for our needs. My husband is self-employed, we’ve been told a ‘low doc’ or ‘no doc’ loan is the way to go as his true income is substantially more than his ‘taxable income’.
Anyone got any ideas on the way to go and who with?Appreciate any practical input.
‘Show me the way to go home’
Hi Hera
It is funny often i hear that clients went to see their mortgage broker and because they were self employed or buying in a Company or Trust name the easy answer is go lodoc or nodoc.
This is usually becuase the MB has little or no experience in Trust Structuring or interpreting self employed accounts.
Most lodoc / nodoc loans are mortgage insured sometimes irrespective of the loan to value ratio so you will often be limited to your eventual loan exposure and this will slow down your wealth acquisition path.
Just because your husband shows a lower taxable income in paper than his gross income (which is normal for self employed clients as they have to deduct their expenses) their is no reason why he would not qualify for a normal fully verified loan.
To ensure the loan is structured correctly and the appropriate advice is give both now and in the future a lot more information would be required but remember there is always a solution to any problem.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
As published in the Australain Property Investment magazine
The Tax department cross checks with their Austrack computer system what self employed people declare as their taxable income with what they state to their low doc loan provider is their actual real income.
If it is different you could get an Audit request to explain to the ATO why there is a difference.Comments are of a general nature and may not be relevant to your individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Duckster, don’t think that would be true or even possible. Austrac records transactions of money movement. deposits and withdraws of large amounts, overseas transfers and suspicious transactions. It doesn’t have any information on employment, declaring income etc. Many years ago I was an active user of Austrac.
What the ATO can do is look at the loan application form and see if the income declared is similar to the income on the person tax declaration. If it doesn’t match up, then they may ask questions.
Child support agency also does this.
But a way around it all is to use a No Doc loan where no income is declared at all.
Terryw
Discover Home Loans
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Send an email to get my newsletter.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
Hera,
I agree with Qlds007 that before you go ahead with Lo/No Doc loans, a bit more work needs to be done to determine whether your “official” income is enough to service your loan. Talk to few mortgage brokers/banks and see what the best you can come up with.Vladimir Alter
Smartline Home Loans, Sydney
Ph: 1300 VLADIMIR (1300 852 346)
Website: http://www.smartline.com.au/valter
Email: reduce.mortgage(AT)gmail.com
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