Pros & Cons of No Doc Home Loans

Purchasing a home can be a tedious task and the process can be made even more difficult if you lack the required documentation that is required to get a traditional home loan. Individuals who are self employed, work on a freelance or contract basis, or whom otherwise can not provide tax returns or mortgage finance statements are often at a loss when it comes to providing ample proof that they are in fact credit-worthy when it comes to their incomes.

Weigh the pros and cons a no doc home loan carefully

Is a no doc home loan right for me?

Lenders understand that just because your financial situation is different does not mean you should be penalized or denied the opportunity to purchase or refinance a home loan. As a result, no doc home loans were designed to assist those who are considered to be non-traditional income earners. But with the privilege of providing less documentation comes certain costs that each borrower must consider before choosing this type of loan.

As previously stated, unlike traditional types of home loans like fixed rate and low rate basic loans, no doc loans do not require that you prove income. However, they do still require that you can in fact repay your home loan in a process that is referred to as self certification.

The Pros

Convenience – If you are willing to pay the extra money associated with no doc loans in order to expedite the home buying process then no doc home loans can help you.

Less paperwork – Purchasing a home requires a lot of forms and applications, many of which concern your income and debts. With no doc loans you can eliminate many of those forms.

Variety of loan options – Most lenders offer a selection of no doc loan types to choose from that includes fixed rate and variable loans, which is important to borrowers who will already be paying considerably more than those who have a traditional loan.

The Cons

They may require a much higher deposit – Because borrowers who require a low doc loan are perceived as a higher risk, you may be asked to pay a considerable amount of money down. This can be a lot of money to come up with, particularly if your income fluctuates.

The interest rate will be slightly higher than traditional loans – Again, since no doc home loans are seen as riskier; the offered interest rate will be more than that of traditional loans. This is an important aspect to remember since those who typically choose no doc loans have unsteady income.

May be subject to fees – Some home loans lenders attach additional fees to their no doc loans; these fees can be for applications and other processing fees. Regardless of the reasoning behind the fees, this is yet another added expense for borrowers who choose this type of loan.

Origin Finance does not offer no doc home loans. We do however offer lo doc home loans. If this does not help you then take some time to contact an Origin Finance Broker to see what home loan options we can find for you.

Contact your local Origin Finance Consultant