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Jessica Darnbrough
Lo doc lending has been given a much needed boost after one lender slashed the interest on its suite of products.
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Effective from today, Better Mortgage Management will offer unlimited cash out loans with rates starting from just 8.44 per cent for loans up to 70 per cent and 8.89 per cent at 80 per cent LVR.
In addition, minor credit impairments of less than $1000 will now not result in the borrower's interest rate being increased on all specialist loans.
According to Better Mortgage Management's managing director Murray Cowan, these changes ensure lo doc lending is now at its most accessible for borrowers since the GFC.
"Previously self-employed borrowers that wanted cash out above 60 per cent LVR had been locked out of the market and were effectively stuck with the loan they took out years before which in many cases were charging rates in excess of 10 per cent p.a." Mr Cowan said
"More options combined with the lowering of rates means more self employed borrowers now qualify for a loan so there is an opportunity for brokers to go through their old customer files and contact borrowers who didn't qualify for finance during the past 4 years".
However, Mr Cowan warned brokers that lo doc lending had changed since the GFC and NCCP, resulting in more income verification requirements than in the past.
"There needs to be reasonable proof of income supplied to lenders now be it BAS, trading statements or a letter from their accountant and all reasonable enquires need to be made to ensure the borrower can afford the loan," Mr Cowan said.
"Months ago many brokers were concerned about writing lo doc loans but lenders and industry legal figures have provided supporting guidance recently which has resulted in more enquires for these loans"
