Low-doc

A low-doc loan is assessed with reduced financial documentation, commonly a signed income declaration supported by BAS statements or bank statements, rather than a full set of tax returns and accountant-prepared financial statements. It exists because many genuinely creditworthy borrowers — the newly self-employed, businesses that manage their tax position actively, or those whose latest return understates current trading — cannot readily produce two or three years of financials showing the income a full-doc lender wants to see. Low-doc lending is business-purpose lending, assessed against declared income and corroborating evidence rather than a formal serviceability calculation from tax returns, and is typically priced modestly higher than full-doc to reflect that reduced verification. Lenders still expect declared income to be plausible for the business and industry, and inconsistent or unsupported declarations are a common reason a low-doc application is declined rather than simply priced up.

Related

Low-doc commercial loans · Alt-doc · No-doc