Glossary

No-doc

What a no-doc loan is, why it relies almost entirely on security and exit, and which products still use it.

A no-doc loan is assessed with essentially no income verification at all, relying almost entirely on the strength of the security and the clarity of the exit rather than any statement of the borrower's earnings. It is confined to a narrow band of the market — principally short-term, property-secured facilities such as caveat loans, where the lender's real question is whether the property and the exit support repayment, not whether the borrower's income covers a monthly instalment over years. Because there is no income assessment, no-doc facilities are priced at the higher end of the category and generally run for a shorter term than a low-doc or alt-doc equivalent. Borrowers considering a no-doc facility should treat the exit as the entire credit story, since a lender writing on this basis is, in effect, underwriting the asset and the plan to repay rather than the business behind it.

Related

Caveat loans · Low-doc · Exit strategy

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