Low Doc 70% LVR No LMI
The 70% LVR low doc policy was predominantly established for borrowers who wanted to borrow to a total of 70% LVR without the need for Lenders Mortgage Insurance or LMI, and get a competitive interest rate. As most lenders who do low doc loans over 60% LVR charge LMI, this policy saves a borrower lots of money.
Lenders who offer low doc 70% LVR loan with No LMI
There are only 2 major lenders who offer low doc 70% LVR with no LMI, and their policies differ from one another. However, some non conforming lenders also offer it using quite high interest rates.
The first major lender who offers this policy asks for Business Activity Statements (BAS’s) for the previous 4 quarters and profit and loss generated by internal management accounts like MYOB or even a spreadsheet. The internal accounts are to evidence there is a going to be a profit after all expenses. This is a cheaper option which is also more flexible in terms of how long you have been self employed.
The second major lender asks for an accountant’s letter to verify the income being declared by the borrower. This is the more expensive option, but this lender offers a construction loan immediately after settlement. this lender also offers a fixed rate home loan with a 100% offset account.
The below table illustrates the points of difference
|Lender 1||Lender 2|
|Lenders Mortgage Insurance Payable||No||No|
|Interest rate applicable||4.38%||5.29%|
|Lenders Mortgage Insurance Payable||No||No|
|ABN Registration||2 year||2 years|
|GST Registration||1 year||2 years|
|Purpose||Purchase, Refinance, Cash Out||Purchase, Refinance, Cash Out|
|Loan Structure :||Principle & Interest or Interest Only||Principle & Interest or Interest Only|
|Borrowers||Personal name, Company, Trust, Business Name||Personal name, Company, Trust|
|Requires Internal Profit and Loss||Yes||No|
|Requires Accountants letter||No||Yes|
|Offset account available||Yes||No|
|Vacant land acceptable||Yes||No|
|Construction Available||6 months after settlement||No|
Loan Types for Low doc 70% LVR with No LMI
With a low doc 70% LVR with No LMI, you can get all types of loan products and options. These include any of the following products and their features;
- Professional package loan
- Fixed rated home loan
- Basic home loan
- Standard variable home loan
- Honeymoon home loan
- Line of Credit loan
- Offset home loan
- Construction loan
- Vacant land loan
- With BAS Low Doc
- Accountants Letter Low doc loan
- Interest only loan
- Interest in Advance loan
- Purchase purpose
- Refinance Loan
- Investment purpose
- Business purpose
- Debt Consolidation
- Cash Out
- Residential loan for commercial purpose
Advantages 70% LVR low doc with No LMI?
The 70% LVR Low Doc without LMI option could be useful for any of the following reasons;
- The 70% LVR Low Doc No LMI policy is quite useful when you have not completed the most recent year’s tax returns and want to use 1 year financials or internal accounts to demonstrate servicing.
- The policy is also useful to a borrower whose business in the last 12 months has significant increase in profitability and turnover from the previous year’s figures. Hence, as most lenders average the last 2 years trading income figures to derive an average income to be used to service the loan, this policy allows the higher year’s income figure to be used to assess affordability/serviceability instead. Averaging the 2 years trading figure can bring a borrower’s serviceability down. Using the 70%LVR Low Doc No LMI option, we use the most recent trading figures generated from internal management accounts which should reflect a higher income.
- The 70%LVR Low Doc No LMI policy is also useful where you want to avoid paying LMI and you possibly have a valuation problem trying to refinance. For example if you had an existing low doc loan at 60%LVR where you tried to refinance and had a valuation shortfall, and you needed that little bit extra to leverage against without the need to pay LMI, then this policy is very helpful. In addition, as we avoid lenders mortgage insurance or LMI using this policy, we also avoid the mortgage insurer’s scrutiny of the loan which can make funding a loan at times difficult.
- The 70%LVR Low Doc No LMI policy is quite useful for cash out purposes. Today most low doc loan lenders restrict cash out using low doc policy. Most lenders restrict cash out on low doc between $10,000 – $100,000. So for example, if you were to refinance your low doc loan to 70%LVR using the No LMI policy and part of this refinance involved taking $200,000 cash out, then that will not be an issue.
- The 70%LVR Low Doc No LMI policy comes in handy when you refinance your business loans, commercial loans secured over your residential property and want to get residential home loan interest rates (see Commercial loans at home loan rates). This can save a borrower thousands of dollars each year onwards.
Names for 70%LVR Low Doc Without LMI?
You could have the loan put into any of the following names:
- Personal/Individual name
- Company name
- Trust name
- Business name
- Or a combination mix of any of the above
At Mortgage Providers we understand that every client´s low doc position is different. We know where to place a loan to achieve the best low doc policy coupled with the ability to avoid mortgage insurance saving the borrower thousands. Further, we can then tailor the loan to be priced at normal home loan interest rates saving the borrower thousands each and every year passing. In addition we can refinance the borrower’s commercial and business loans to residential home loan interest rates.