Low-doc construction loans are a type of loan product designed for self-employed individuals and business owners to build property where the traditional income verification documents needed for a standard home loan are either unavailable or not required by the lender.
The alternative income documents used for a low-doc construction loan can include a borrower’s self-declaration of income, bank account statements, and accountants’ letters. In some instances, a lender may be able to provide the loan and capitalise the interest based on an exit strategy (such as the sale of the property) once the building is completed.
Do all lenders offer low-doc construction loans?
No. There are a wide range of lenders in the Australian market, however, not all lenders offer construction loans. Of those who do offer construction loans, even fewer of those have low-doc construction loans available.
This is a highly specialised lending requirement. Speaking with a mortgage broker who has experience in low-doc construction finance can save you time, money, and disappointment.
How low-doc construction loans differ to a standard construction loan?
Low-doc construction loans, once approved, work much the same as traditional construction finance. The borrower will be required to make their contributions to the construction first, and subsequent payments will then be made by the lender.
A certificate of occupancy will usually be required before the lender will make the final payment to the builder.
Advantages and disadvantages of low-doc construction finance
The main advantage of low-doc construction finance is it provides access to funds for construction to those who would be unable to obtain finance via traditional methods. The main disadvantage is that this type of loan will come with higher interest rates and fees and will often require a larger deposit or contribution by the borrower.
Why choose Bell Partners Finance for your low-doc construction loan?
Bell Partners Finance have been helping self-employed individuals, business owners, as well as small and large developers construct properties in Australia for more than a decade.
We are experts in analysing and presenting complex construction and development finance applications and have strong relationships with the lenders who specialise in this space.
Speak with one of our low-doc construction mortgage brokers about building your next property today.