Christchurch franchise owner Nick Rushton says there has been substantial growth in lo-doc over the last 24 months with plenty of potential for that to continue.
“Our lo-doc business has tripled in the last two years. Although it’s still quite a small part of our business, it is growing steadily,” Rushton says.
Chief executive Jeff Staniland, is a champion of lo-doc as a way forward for tens of thousands of self-employed and independent business owners in a complex loans market.
He says arranging a home loan has historically been a difficult and often unsuccessful process for these people.
“Self-employed and business-people want and should be able to access the equity in their homes – particularly after the gains of the past few years – either for an investment property, to renovate, or perhaps to invest back into their businesses."
In Australia lo-doc loans now make up around 15% of the mortgage market, and because of their complex and variable nature are mostly placed through independent mortgage brokers.
“The good news is self-employed and business-people do not generally have to pay a premium for a lo-doc home-loan, as they would if they used old-fashioned sources of alternative finance such as lawyer’s trust funds,” he says.
Staniland says lo-doc loans now have terms and conditions, including deposit requirements and interest rates, comparable to mortgages offered to so-called traditional customers.
Although these loans are called lo-doc, there is still paperwork.
Generally lenders require three months of banks statements and a statement of position. Some lenders may call an applicant’s accountant to verify what is in the statements.
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