- Personal Finance
No Doc Loans
Applying for No Doc Loans
Proving your state of income is often times a requirement if you are applying for a mortgage or any type of loan. Documents that state the history of your income and employment status are used to determine your capability to make payments for the loan that you will apply for. Some people are hesitant to avail of any mortgage due to the lack of ability to present proof of income. People who face this predicament are those who are self employed and have their own businesses.
Today, no doc loans are now offered by many lenders in the market. This loan is intended for those who can’t produce documents that will validate their monthly revenue or state of employment. There are now many options available for those who are in need of financial assistance. Some lending companies may offer low to no documents even for bad debt mortgages and other types of loans.
Keeping a Good Credit Rating
No doc mortgages present more risks compared to loans that require standard documentation that is why they are also offered with higher interest rates. As a replacement for the usual documents necessary for loan applications, the only demand from the borrower is to submit an official declaration or a sworn statement of his or her monthly income. There is always a possibility that these remortgage lenders that offer no documentation for loans will check out the credit rating and history of the borrower, however, some of the loans are granted out of trust and good faith.
It is very important that you make your payments on time and keep a good credit rating. Having a great source of monthly income and a clean credit history with no record of late payments or non-payment of loans will help you apply for no doc loans without all the hassles that usually come along with it. The fact that you cannot present the necessary documents to prove your monthly revenue will no longer be a big impact at all. Lenders will have the proof they need to verify that you are capable of paying your loan on time elevating the risk for this type of loan.
Loan Risk and Interest Rates
Borrowers should be aware of the difference between interest rates that are being offered for no doc loans because the rates are priced according to the risk it presents. A bad credit remortgage loan for example is one type of loan that will demand for higher interest rates. It is best that you shop around first and compare the rates on no doc mortgages that are out in the market before taking the leap.
If you are decided that this is the most suitable type of loan for you, be ready to pay more on interest rates. Compared to traditional loans, no doc loans demand more when it comes to interest rates and other additional fees. With the fierce competition among financial lenders in the market, there is a big chance that you’ll still find the lowest fees and the best rates out there. Make it a point that you understand every detail of the agreement before you sign on the loan, which means you get to read the ones in very fine print as well.