Many blame the Global Financial Crisis on American Non Bank Low Doc / No or Lo Doc Lenders, who provided non conforming mortgages to those who could never afford them, with no deposit lending in excess of 100% of the home valuation. Mortgage interest rates were often heavily discounted at the outset, borrowers may also have been unemployed, and when interest rates were adjusted to market mortgage rates, borrowers in USA fell into arrears and left their homes in droves.
Hopefully this will never reoccur and for some time the no financials loan, also know as the low doc, lo doc, No Doc or non conforming loan, which was primarily used to assist self employed individuals and small business operators was withdrawn from the market.
Now though, this low doc product has been re launched to the market, with terms from 12 months to 30 years, by Non Bank lenders, including solicitor nominee funds, private lenders and finance companies. Low Doc, as high as 80% of the property valuation, provides opportunties for those who are looking to buy a home, or at a start up business, or they may have been running profitably for say 6 - 18 months require extra funds for expansion and to take advantage of new opportunities. Often clients have been to their Bank, who have insisted on at least 2 -3 years financial accounts prepared by an Accountant. The Bank can then average your income over this period, so one bad year can ruin your chances. Who has got through recent times without some financial stress?
Another classic example of the the low doc loan helping clients, is when you have good equity in your home property, but often as a result of the recession, cash flow has been down and you want to refinance up to 80% to consolidate debts or inject further capital into your businness. This may also create the opportunity to extend the term of the mortgage or loan to significantyly reduce monthly payments. Changing from a Principal and Interest payment loan to Interest Only can also assist free up some monthly cash. We often have new clients referred to us, who have an excellent history with their Bank, but the Bank does not want to lend any more and in some instances has decided that they will reduce your facilities, without your consent, to try and force you to refinance.
The good news is that we now have a variety of non bank, nominee and second mortgage lenders that provide up to 80% Low Doc or Lo Doc, Easy Income Verification solutions which can help you with those non conforming low doc loans, that make sense to you, but not to your Bank!
Some examples would be:
NOTE: In all these examples the lender must be fully informed of a borrowers situation, so that they can then make their lending assessment based on their usual credit terms and conditions. This may include checking income and expense details against bank statements and requesting an updated Registered Valuation, through an approved valuer. These facilities will attract a higher interest rate, so it is essential that a sound plan exists to repay through sale of an asset, or to refinance to a more competetive rate once income details can be verified through financial accounts.
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