The Cost Of Convenience: BOQ Low Doc Home Loans

Ever wondered what is meant by a Low Doc home loan? Low Doc is short for low documentation. Applicants go through the normal home loan application process, but instead of a supply of pay slips and statements, the only documentation required to show proof of income is a signed declaration. Bank of Queensland offer Low Doc options on their variable, fixed rate and line of credit loans.

Low Doc loans, such as the Bank of Queensland options could be useful for borrowers who are contractors, self employed or have a small business. That is, borrowers who have an income and assets but don't always have the necessary paperwork to qualify for a standard home loan could benefit from a Low Doc loan.

A Low Doc loan may be more convenient to access than a traditional loan, but beware any of hidden fees. All of the Bank of Queensland Low Doc options attract an application fee of $995. This is approximately $400 to $500 more than other loan types within the Bank of Queensland, and among the highest Low Doc application fee of other bank and non-bank lenders.

Generally, less documentation equates to more risk for the bank, so Low Doc such as the Bank of Queensland options usually offer fewer features and stricter limitations than standard loans. Most Low Doc loans also require Lenders Mortgage Insurance which can add to the cost of the loan considerably.

For example, borrowers choosing Bank of Queensland Low Doc loan options can borrow a maximum of 80% of the value of the property. Lenders Mortgage Insurance is required for any of their Low Doc loans that are greater than 60% of the property's value. This means that the Bank of Queensland's Low Doc borrowers must either have significant savings for a deposit, or be able to cover the added cost of Lenders Mortgage Insurance.

Before applying for a Low Doc home loan, be sure you understand the terms and conditions of your loan. Find out the details of any special features offered, and look into the fine print to learn about any limitations that a Low Doc home loan may put on your financial future.