Every positive aspect has a negative side which may concern individuals and restrict them from following that path. The same may occur with a low doc home loan. Self-employed business owners usually consider them to be a suitable finance option but, there are a few statements that make them worry about making the low doc loan decision.
First of all, let us tell you that a low doc loan is not only an alternative option for buying a home. Rather, the financing is available for different purposes including, personal use, investment use, equity release, business purpose, refinancing, etc. People can opt for low doc funding to furnish their needs without any tension. The second thought is about the myths that people hear about low doc loans. Every coin has a different side and so does a low doc loan. Especially, when it comes to low doc home loans, people start talking about the negative aspects, which are in fact, not negative points. These are just the terms that have been wrongly elaborated in front of borrowers.
Let’s have a look at the myths and wipe them out from the borrowers’ mind with the correct statements –
- Self-employed pay a high rate of interest
The myth is busted that self-employed people have to pay a higher interest rate to borrow money. Being a self-employed individual doesn’t mean loan lending organizations need to charge a higher rate of interest. It’s just the matter of a few conditions and limitations that differ from normal loans. The interest rates of the loan can be higher if you need to just rely on simple documentation such as an Accountant Declaration to apply for a low doc home loan. Undoubtedly, a slight change in interest rate will be there but, that would only be applied on very simple income substantiation.
- Self-employed can’t borrow a high amount
Who said that self-employed are not able to apply for a large amount to buy a home? Reality is, low doc home loan lending organizations allow people to usually borrow up to 80% of the property value and this can be up to $1million or more, depending on the lender and properties involved. According to the facts, there’s nothing to doubt on.
- Low doc states no doc deals
This is the biggest myth which has been busted with very clear facts. Most of the self-employed people have a perception that low doc loans can be applied for without any documents (aka no doc loan). Here, they understand they don’t need to submit any documents to apply for a low doc home loan. This is completely wrong. For a low doc loan, borrowers need to present some form of income substantiation. The information needs to be current and they cannot present out-of-date documents as proof of income.
All the points have been proved within the appropriate statements. There are many other facts that make an individuals’ mind. If you have any doubt, make direct contact with a credible market loan lender. It would also be great if you discuss your requirements in a face to face meeting where the broker where they will explain everything in detail.