Lo Doc loans or Self Certified Loans are suitable for the self employed and/or PAYG borrowers who may not be able to provide their full financial details (Note: Although the borrower may not be able to provide up to date or full financial details they will still be required to sign a Declaration Form, stating their income, and that they will be able to afford the loan repayments). Most Lo Doc lenders will lend you up to 80% of the property value you are offering as a security, although there are now some Non Bank Lenders that will allow you to borrow up to 95% of the value of the property you are offering as a security at very competitive rates.

Some lenders may still require a letter from your accountant to confirm your declared income and/or also that the loan you must be Unregulated, which means that 50% or more of your loan is for investment purposes.

What is the difference between Lo Doc &  No Doc Loans?

There is no precise definition of a Lo Doc (also referred to as Low Doc) or a No Doc loan, and different products have different credit requirements. Generally, however, Lo Doc Loans require some form of income verification such as bank statements, but less evidence than full requirements. No Doc Loans sometimes also known as Asset Lend require no evidence and solely relies on the declaration form signed by the borrower stating that the loan they are applying for won't put them under undue financial hardship (Note: Due to No Doc loans are a much higher risk for the lender, you will normally only be allowed to borrow up to 70% of the property value, that you are offering as a security).

Australian Tax Office (ATO)

There is some concern with Lo Doc borrowers that the Australian Taxation Office (ATO) will target Low Doc Borrowers for tax evasion.

Remember that it is not the responsibility of the lender to make sure you are paying enough tax. All the lenders are trying to establish is that you have enough income to meet your obligation under the loan contract. The ATO have looked at Lo Doc loans in the past. They found that many borrowers claimed a different amount of income on their Lo Doc application to what they have declared  to the ATO. They also found that many Lo Doc borrowers had not submitted the tax returns for a number of years. It is ultimately the responsibility of the borrower to be able to justify the declared income if they were ever audited by the ATO.