As low-doc loans become increasingly common, specialist lender Liberty says every broker should be comfortable to offer them in the right circumstances.
Whether they are self-employed or have multiple casual jobs, many credit-worthy borrowers do not have the traditional documentation required to confirm their income levels. Low-doc loans allow these borrowers to prove their income using alternative forms of documentation such as bank statements, business activity statements or letter from an accountant.
Group sales manager at Liberty, John Mohnacheff, said brokers should never immediately turn away a customer solely because the type of documentation they have.
He added, “It is a human who has walked into your office looking for help. And they want to buy a car, buy a commercial property, buy a house, or they want a personal loan. The broker should try to find a suitable solution for them.
“They’re self-employed; they don’t receive a pay slip. They might be a builder; they might only get paid every six months or 12 months, any variable. They might have four casual jobs. It’s not less documentation, just different. It comes down to verifying their suitability for the loan and their ability to be able to repay it. It is identifying a different way to validate that this person can actually service their loan.”
“If you’ve never submitted a low-doc loan, go to your BDM. That’s what they’re there for. Go onto your aggregator website, all the information is there.
“It’s not difficult to up-skill. The difficulty is in the broker’s mind saying it’s too difficult.”
Mohnacheff also adds that low-doc customers should also be informed about their insurance options, as they do not necessarily know what to expect in the future.
He added, “Just because they’re self-employed doesn’t mean they shouldn’t protect themselves or protect the loan. It should be paramount if they are self-employed. If they had an accident or an illness, how are they going to pay if they can’t work? So, self-employed people especially should consider having loan protection.”
