Everyone aspires to own a home, but for that, there is an utter necessity to be financial strengthened. So basically, the low doc loans are the ones which are lent to a person without seeking the information for the sources of income. These loans were not sanctioned for the construction purpose previously but now low doc construction finance loans can be bought for such purposes.
Banks are allowing the loans with relaxed criteria which make the scheme to be the most widely preferable for financial stability. Now let’s find out further detailed information about this.
One can be granted low doc construction finance loan of about 80% of the land area and the cost of the construction as well. But one needs to be eligible for the criteria which are as follows:
- You are a licensed builder.
- You have ABN.
- Need to showcase the income source by using bank statements or an accountant’s letter.
In case, you are not eligible for anyone of the criteria that are mentioned above then there is another way as well which is by making use of the development loan if there is a large deposit. Different banks provide great rates of interest, and this is also an important part of choosing the appropriate institution to avail the low doc construction finance loans. The banks need to have the assurance that you’re a licensed builder with the Home Warranty Insurance. They mostly seek a building contract backed by insurance so that they can be assured of the income source.
To grant the low doc construction finance loans, the financial institution requires some documents with the help of which it can be assured that the borrower is eligible to get the loan. As mentioned before that you are not supposed to show the financial details such as the tax returns, financial statements, etc.
But, there is a necessity to present your exact income source and the details about the expense of the construction whose cost is required to be financed. Following are the list of the documents that most banks require to assess whether a loan has to be sanctioned to the borrower or not:
- The copy of the tender of the contract assigned to you.
- Copy of the draft plans.
- Schedule of the completion of the construction.
- Building permits (VIC).
- Insurance of the builder.
- The insurance of the builder’s risk.
Tips to Get A Low Doc Construction Finance Loan
Never start the construction of your house before the loan is sanctioned fully as that can be a matter of great risk. The first step behind any construction is simply strengthening yourself financially. Thereby you can carry on your construction with complete security. Moreover these days there is no financial institution or lender who can grant the loan to a normal builder. They mostly seek for the licensed builders, or else you have to have deposits in lumps.
The alternative can be that the lender requires having enough property equable to which the loan can be sanctioned. And if you don’t have enough property, then you can go for the full doc construction loan. If you don’t have good credits so that you can obtain the finance then it mostly becomes impossible for you get low doc construction finance loan.
This is all you need to know about the low doc construction finance loans. This is the best scheme that can be implemented to strengthen the finance before beginning construction on your new home. It is also secure as the builder must be licensed.