Low Doc Frequently Asked Questions

Understand what Lender's Mortgage Insurance (LMI) is, Loan to Value Ratio (LVR) and Credit Score. Do we need a face-to-face interview? How confidential is ....

As of the 1st July 2010, the regulation of Credit passed from the States to the Federal Government under a new Act called the National Consumer Credit Protection Act (NCCP). There is now a strict code of practice in place when it comes to Mortgage Lending. Major changes include:

  • Brokers/Lenders need to make fair and reasonable enquiries that Borrowers have the financial capacity to repay a loan
  • Brokers/Lenders need to be sure that the Loan is not unsuitable for the Borrowers purposes
  • All Brokers/Lenders need to formally Licenced to offer Credit Advice
  • Transactions involving Residential Investment properties where the Borrower is a natural person are now covered by the Code

For more information, visit www.asic.gov.au/credit.

We have been providing home loans for over 10 years and operate under Australian Credit Licence Number 381343. Our processes have also been audited by ASIC. We comply with the Mortgage & Finance Association of Australia (MFAA) Code of Practice and we are a member of the Credit Ombudsman Service Limited (COSL). AFG (Our Aggregator) was established in 1974 and processes more than $2 billion of mortgages each month. AFG is now the largest provider of mortgage broking services in the country and has strict etchical guidelines.

Lenders Mortgage Insurance (or LMI) does not protect the borrower in any shape or form. It is an insurance policy taken out by the Lender in case you are late with your payments or default on the loan. If this occurs, the mortgage insurance company will pay the lender the shortfall and will then recover this amount from you. Mortgage insurance is normally payable by borrowers on all loans with a Loan to Value ratio exceeding 60% on Low Doc Loans (in some cases, mortgage insurance is not payable but a risk fee is payable in lieu [at any LVR]).

A Loan to Value Ratio (LVR) describes how much you can borrow as a percentage of the value of the offered security property(s). For example: You are offering 2 houses as security worth a combined $500,000. You wish to borrow $350,000 in total. The LVR is then 70% ($350,000 divided by $500,000 times 100).

Generally no, we conduct interviews via the telephone and then correspond via email and fax. We have been doing this successfully for over 10 years and have streamlined processes in place to ensure that the right information is provided every time.

Your name will NOT be disclosed to any 3rd parties unless they are directly involved with the loans process and you have given us written permission to share your information with them (eg: Lenders, Valuers and Mortgage Insurers). Please note that we also abide by the highest ethics in the industry. We are Members of the Mortgage and Finance Association of Australia (MFAA) and the Credit Ombudsman Service (COSL). Our internal processes are heavily regulated and we will always be upfront with you with respect to all costs associated with the transaction.

No, we belong to the Aggregator Group Australian Finance Group (AFG). AFG has access to all of the major Banks as well as a cross section of other Lenders including a number of Building Societies and Credit Unions. Additionally, we have access to a number of Low Doc products that are not normally available through Brokers. We are confident that you will find a suitable loan from the products we currently available.

We are very experienced (a minimum 15 years experience) and we can usually assess your eligibility for a Loan following a 10 minute conversation.

No, and nobody can. What we can guarantee is that we will tell you if we can help (or not) following our initial telephone conversation. We will not "get you on the hook" if we can help, then we can help if we can't help, then we will tell you and explain why. We don't believe in filling out ANY paperwork until we are 95% plus sure that your Application will be successful.

Most Loan Applications are lodged "electronically" by the Lenders Staff or a Broker. As part of this process, many lenders electronically scan the profile of your Application and assign you a "credit score" (or "risk profile score") at lodgement time. Examples of things that can effect this score are:

  • Whether you are Single (this is a negative on the Score as Lenders regard this as risky if there is only one income earner)
  • Stability of employment
  • Number of Income Streams (usually two for joint borrowers)
  • Type of employment
  • Stability of address
  • The state of your "Credit File" (eg: number of recent enquiries, presence of Defaults or Judgements etc)
  • Type of Application (eg: a Low Doc Loan vs a Full Doc Loan)
  • Whether it is a refinance or a purchase
  • A poor asset position in relation to age
  • A high level of consumer debt
  • Incomplete details when lodging an Application (eg: name of the nearest relative, bank account details, superannuation).

Most of the major Banks use a Credit Scoring system. If the Application does not pass the Lenders minimum credit score, then the Application may be instantly declined. Having said this, there are a number of Lenders that DO NOT use Credit Scores (every Application is manually assessed by a Credit Assessor). For this reason we may suggest certain Lenders over others if we feel that your profile is likely to be at risk of failing an automated Credit Scoring system.

No - in most cases it is a "horses for courses" situation. We listen to your story and we will then tell you whether the Lender you are interested in would be suitable for your circumstances. If not, we will suggest other Lenders and explain why we have made that recommendation. Bank's Policies vary greatly and you will find that some Lenders will be more suitable for you based on your current circumstances than others. Some examples include:

  • You may not service with one Lender but will with another
  • Whether your Credit activity would be best suited to a Lender that doesn't "credit score"
  • Your income proof may be better suited to one Lender over another (eg: BAS, Accountants Letters or Bank Statements)
  • Your credit status may cause a problem with one Lender but not another
  • The property you want to offer as Security may not be acceptable to your Lender of choice
  • If you are reliant on rental income, then some Lenders have a more favourable assessment Policy than others

The list is extensive this is why an experienced Mortgage Broker will help you avoid Lender rejections by asking the right questions up front. The interest rate is not always the determining factor, it is more a case of "best fit" for your circumstances.

Absolutely not. We will agree on a Lender/Product based on our discussions and we will conduct in depth preliminary checks before we lodge a formal Application. Every time you lodge an Application, it is "stamped" on your Credit Report. Many Lenders "electronically" assess your Application ("credit score") at lodgement time if there are too many recent enquiries, this may lead to an instant rejection. We will not lodge an Application unless we are 95%+ sure that it will be successful. In the rare event that your Application is declined, we will call you to discuss the reasons why and to see if we are able to offer an alternative.

Need help understanding your loan options?Please call us on 1300 736 976 or send an enquiry now.