Commercial Low Doc Loan

Financing Commercial Property using a low doc loan

Commercial low doc loans came about in the late 1990’s when non bank lenders introduced them into the market.

Low doc loans in general are for people who are self employed or in business for themselves with either an active ABN or active company. These are people who can’t verify their income or produce their financial statements.

Other reasons where one will seek a commercial low doc loan is where a borrower’s financial statements are too complex to verify income streams,  too many paper write off expenses like depreciation, and large amounts of cash income for the business not necessarily reflective in a borrower’s financials.

There are a few lenders who do commercial low doc loans, and their requirements differ from one to another.

Commercial low doc loans now account for approximately 11% of all loans generated at Mortgage Providers Pty Ltd.

Are commercial low doc loans more expensive?

As a general rule, many low doc commercial loan lenders offer pricing dependent on the LVR. The lower the LVR, the lower the interest rate applicable.

However, some lenders who specialize in commercial low doc loans offer some very competitive interest. So much so, that the interest rates which are offered are the same price as full doc loans. This is generally achieved for most good quality borrowers.

What is the maximum LVR for a commercial low doc loan?

This is dependent on the lender. Most commercial low doc lenders will lend to a maximum of 65%LVR. However, there are a few commercial low doc lenders that will also lend to 70% LVR with one lender even going as high as 82%LVR (see Commercial Low Doc loan to 82%LVR).  Best of all, the commercial low doc rates at 82%LVR are the same as normal full doc rates.

What are the requirements for a commercial low doc loan?

The criterion differs from lender to lender. However it is possible to get a commercial low doc loan for:

  1. Purchases
  2. Refinances
  3. Debt consolidation
  4. Cash out for business purpose

If I had bad credit, can I still get a commercial low doc loan?

If a borrower had bad credit then it is still possible to get a commercial low doc loan. This will restrict the amount of lenders which can be used, but this is possible to an LVR of 75%.

What type of documentation is required for a Commercial Low doc loan?

Most commercial low doc loan lenders request you have an active ABN first and foremost.

Also, commercial low doc lenders ask for an income declaration made by the borrower on its own. This income being declared is the income used to determine affordability by the lender and the borrower.

However, some commercial low doc lenders ask for Business Activity Statements (BAS’s) to evidence the income being declared. Using this method, the lenders take 40% of the business turn over as income.

Other commercial low doc lenders view the turnover of a borrower’s business. Using this policy, they assume the total turnover of the business income at 40%.

What types of properties can I use to secure a commercial low doc loan?

Most property types can be used as security for a commercial low doc loan. These include:

  1. Commercial property
  2. Industrial property
  3. Residential property
  4. Rural property

What types of borrowers are acceptable with Commercial low doc lenders?

All types of borrowers are acceptable Commercial low doc lenders. These include:

  1. Personal / individual name
  2. Company name
  3. Business name
  4. Trust name
  5. Partnership names
  6. Or a combination mix of any of the above

At Mortgage Providers we have access to commercial low doc lenders which are either banks, or major financial institutions. Further, we know the policies of all the different lenders and know how to present a loan to a lender giving the client the same interest rate as a full doc loan which could save thousand for the borrower.