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Additionally, they must also produce proof of all tax returns filed and financial statements supporting these claims. A ready solution to their problem is a low-doc loan.
A low-doc loan or a low-document loan is a loan that is meant for self-employed people who have not yet filed their tax returns and other borrowers with a private income source such as small business owners, who have no traditional proof of income and are therefore, unable to provide full financial statements and other evidences of their income to qualify for a loan.
Low Doc Home Loans are available both to investors and owner occupiers, who have a good credit history and at least 20 percent equity in their home or residential property. The loan amount is capped at 80 percent of the value of the property. The borrower can opt for a standard Principal and Interest Loan, an Interest Only loan, or even a Line of Credit. With many lenders offering standard and premium low-doc loans with either fixed or variable interest rates, and numerous other features and flexibility options, the popularity of low-doc loans is on the rise.
The greatest advantage of a Low Doc Loan is that the borrower need not provide proof of his income when applying for a loan. However, most borrowers would be required to submit an income declaration form along with a standard loan application. Some lenders even charge higher interest rates at least during the initial loan term until the tax returns have been filed by the borrower. Another advantage of this loan is that the entire application process is streamlined with very little paperwork.
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