Lo Doc & Impaired Credit
Lo doc loans
Some lenders offer loans to borrowers whose income has not been verified. Borrowers give the lender a signed declaration of income form that states the amount of their income and declares that the amount stated is sufficient to cover their living expenses and loan repayments.
Self-employed people who have not had their accountant prepare recent financials would fit this loan category. They may have sufficient income, but not the documents to prove it.
Lenders will impose a higher interest rate to compensate for the higher risk involved in this type of loan.
Credit impaired loans
You might find that you don't meet the lending criteria to qualify for the best home loan rates. This might be because you have an unsatisfactory credit history or a mixture of bad credit history or income volatility. For people in these situations, some lenders offer non-conforming or credit impaired loans.
Lenders impose a higher interest rate to compensate for the higher risk involved in this type of loan.
These types of loans tend to be offered as shorter-term solutions and there is often a minimum loan period and/or an early exit fee. Once you've rectified your situation you can usually apply to return to prime lending rates.
