Low Doc Loans Crucial For Self Employed

Borrowing money is an important part of our lives, and without it, the majority of people would find it hard to function on a day to day basis. Mortgages allow us to buy our dream home, credit cards help us pay for that overseas trip, and no-deposit options from retailers allow us to purchase that 60 inch LED tv in time for Christmas!

But when it comes to loans, having a strong credit history and solid paperwork can be very important. Lenders have tightened their requirements, especially after the craziness of the global financial crisis a few years ago. This can make things very hard for self employed people, who’s earnings may not be as “stable” as someone who works for an employer.

Luckily, low doc loans are the saviour of the self employed. These loans require less documentation than regular loans, which is perfect for sole traders who may not have access to the tax returns and financial statements such as pay slips normally needed from your lender.


But  applying for a low doc loan still doesn’t mean you will definitely be approved. Borrowers generally need to satisfy these requirements:

  • must have a clean credit history and solid repayment record for any other loans
  • must confirm legitimacy of self-employment, usually through a registered ABN
  • must self-certify your income (with a signed borrower’s income declaration)

Low doc lending has tightened

Prior to the GFC, you could get a low doc loan simply by signing a statutory declaration stating you could meet the repayments. However this saw a number of borrowers unable to pay their loans back, and now lenders are very strict with the above requirements.

Low doc loans can also have restrictions. You may not get as good an interest rate as other loans. Some banks do not allow you to switch deals in the first few years. And if you borrow between 60-80% you will need to pay mortgage insurance (for regular loans this is only required if borrowing more than 80%).

But even with the restrictions, they are still a great way for people with minimal paperwork to borrow.

Some of the better quality lenders offering low doc loans:


Before applying for a loan, you should be asking a number of questions first.
Can I make the repayments? Is the debt realistic for my situation?
Will my earnings be stable enough if there’s an interest rate rise?
What other regular expenses do I have each month?