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How Easy Is BankWest's Easy Doc Loan?
Bank West
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No problems with your boss, you can work the hours that you like and you're in charge of your own Christmas party. Being self employed has many benefits, but when it comes to applying for a home loan it can be difficult to provide the proof of income that banks require.
A low documentation loan such as BankWest's Easy Doc Loan means that if you are eligible, you don't need to spend hours sorting through pay slips and financial statements to prove your serviceability (which means your ability to make regular repayment on your home loan). With an Easy Doc loan application, your loan could be approved with as little as a signed declaration of your income.
Generally, less documentation equates to more risk for the bank, so many Low Doc products offer fewer features and stricter limitations than standard loans. For example, with BankWest Easy Doc, a redraw facility is available but with a minimum amount of $1000. The application fee of $700 is considerably higher than other BankWest loans, and higher than many other similar low doc products offered by other lenders.
The convenience of low documentation loans means that the interest rate payable is higher compared to other loans on the market, but the BankWest Easy Doc loan switches to the lower rate Lite Home Loan after three years. Bear in mind though that even this little home loan rate could be higher than the rate offered by other non-bank lenders.
BankWest Easy Doc borrowers can borrow a maximum of 80% of the value of their 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 low doc borrowers must either have significant savings for a deposit, or be able to cover the added cost of lenders mortgage insurance.
If you do decide to apply for low doc options such as the Easy Doc loan from BankWest, be honest when it comes to declaring your earnings. Declaring more, or less, than you really make could have messy consequences down the track if you are audited by the Australian Tax Office. Recent reports from the ATO suggest that they're increasing the number of audits they perform on low doc home loan applicants.
Before applying for any home loan, be sure to do your homework to find the right solution for your financial situation.
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