What Is A Low-Doc Loan & Who Can Benefit From One?

Whether you’re applying for an investment loan, a personal loan or a business loan, your application must pass several lending eligibility requirements before it can be approved. As a prospective investor, understanding these requirements can help you prepare more effectively and improve your chances of securing a competitive investment loan rate. In this blog post, we’ll explore what an investment loan is, the eligibility criteria for obtaining one and why it’s worth partnering with a mortgage broker to streamline the process. What is an investment loan? An investment loan is a mortgage that finances property intended for rental income or long-term capital growth. Unlike an owner-occupied loan, which finances a home you live in, an investment loan in Australia is structured to support property investment goals. The big difference between owner-occupied loans and investment loans in Australia is the risk assessment applied and interest rates available. Investment loan rates are generally higher than owner-occupied loans because lenders may consider investment properties to carry higher financial risk. Depending on the lender, investment loans may also feature different repayment structures to maximise tax benefits for investors. Eligibility criteria for obtaining an investment loan in Australia — what you need and how to prepare To secure an investment loan, borrowers must meet several criteria. This process is to determine your borrowing capacity. While exact requirements vary between lenders, the following key factors typically influence loan approval: 1.Sufficient deposit or equity Lenders usually require a higher deposit for investment loans compared to owner-occupied loans. Most lenders prefer a minimum 10%-20% deposit, though having a larger deposit (20%) can access more competitive investment loan rates and help investors avoid Lenders Mortgage Insurance (LMI). This specialised insurance protects the lender from potential repayment defaults. Alternatively, if you already own a property, you may be able to use your home’s equity to fund your investment purchase. 2. Stable income and employment history Lenders assess your income stability to ensure you can manage loan repayments, even if rental income fluctuates. Typically, full-time employment, a strong self-employed income record or a combination of salary and rental income strengthens your loan application. 3.Serviceability Lenders conduct a serviceability assessment, considering your current income, rental income projections, existing loan commitments and everyday expenses to ensure you can afford the repayments should interest rates rise. 4.Good credit score and history Your credit history tells a lender everything they need to know about how you manage money. Naturally, an excellent or good credit score demonstrates your financial responsibility and gives lenders peace of mind. Meanwhile, a history of late payments, defaults or excessive credit inquiries may lead to rejection or higher interest rates. 5. Rental yield and property type Lenders assess the expected rental income from the property to determine how it contributes to your loan affordability. Properties with strong rental demand and higher yields may be viewed more favourably. However, some lenders cap the rental yield your property can achieve, limiting how much of that income is factored into your borrowing capacity. Working with a knowledgeable broker can help identify lenders who will get the most out of your property’s rental income potential. 6. Loan-to-value ratio (LVR) requirements LVR represents the loan amount as a percentage of the property’s value. Lenders prefer a lower LVR (below 80%), which can help investors access lower investment loan rates. If the LVR exceeds 80%, Lenders' Mortgage Insurance (LMI) is a viable option to secure a strong investment, even without the standard 20% deposit. Some lenders may even waive LMI for certain professions, such as accountants or solicitors. 7.Interest rate buffer and stress testing As part of their assessment, lenders apply an interest rate buffer (typically 2-3% above current rates) to ensure borrowers can afford repayments if rates increase. This is also known as a stress test. Due to industry regulations, lenders must minimise risky lending and ensure borrowers do not take on more than they can afford. This test helps lenders assess whether the loan remains affordable to the borrower under financial strain. Get expert investment guidance with Universal Finance Corporation Between varying rate tiers, fees and lending criteria, finding the right investment loan can be tricky (and costly). But by partnering with an experienced mortgage broker, you can say goodbye to confusing jargon, lengthy paperwork and unnecessary headaches. At Universal Finance Corporation , we specialise in helping property investors secure the best investment loan in Australia. Our expert mortgage brokers provide personalised advice and compare top lenders within our network to ensure you get the most competitive loan options tailored to your needs. Get in touch with us today to discuss your investment loan needs by calling (02) 9558 9666 or submitting an online enquiry form.

Buying your first home in Australia has become increasingly difficult. Between skyrocketing house prices, cost-of-living pressures and high-interest rates, many first-time home buyers are struggling to enter the property market. In response, the government regularly rolls out new initiatives aimed at making the great Australian dream more achievable. One of the most talked-about programs is the Help to Buy scheme. While the Help to Buy scheme in Australia promises to ease the burden for first-time buyers, it’s important to understand exactly how it works, along with the potential drawbacks. In this article, we’ll break down what the scheme is, its benefits, eligibility criteria and state-specific property caps. What is the Help To Buy scheme? The Help to Buy scheme is a shared equity initiative announced by the Australian Government, which is expected to launch in July 2025. Under this program, eligible first-home buyers can purchase a home with as little as a 2% deposit, with the government contributing up to 40% of the property’s value for new homes (or 30% for existing homes). In return, the government retains a proportional interest in your property. This means that you don’t need to take out a loan for the full value of the home, reducing your mortgage repayments and avoiding Lenders Mortgage Insurance (LMI), which can be an additional financial burden for many first-time buyers. The government’s contribution is interest-free, and there are no ongoing repayments for the equity share unless you sell, refinance or choose to buy back the share. How does the Help to Buy scheme work? Sounds interesting? Here’s a simplified look at how the Help to Buy program works: You find a property within your state's price cap (more on that below). You contribute at least a 2% deposit. The government contributes up to 40% (for new homes) or 30% (for existing). You take out a mortgage for the remaining amount (for example, 58% if the government contributes 40%). The scheme aims to reduce the upfront and ongoing financial burden of buying a home, allowing hopeful buyers to get onto the property ladder faster. What are the benefits of the Help to Buy scheme? The Help to Buy scheme in Australia offers several advantages: Lower deposit requirements — For many first-home buyers, the biggest hurdle of buying their first property is saving the initial deposit. While the rule of thumb is to apply for a mortgage with a deposit of 20%, under the Help to Buy scheme, you can buy a home with as little as a 2% deposit. No LMI — Since the government acts as your guarantor, you avoid paying Lender’s Mortgage Insurance. This is an insurance premium borrowers with a deposit below 20% are charged to safeguard the lender against potential repayment defaults. Reduced monthly repayments — With a smaller loan amount, your monthly repayments are significantly lower, helping you save on interest and creating more wiggle room in your budget. Increased affordability — The Help to Buy scheme may enable buyers to purchase in areas that would otherwise be out of reach. These benefits can be game-changing, particularly in high-cost areas like Sydney or Brisbane. However, it’s not all smooth sailing — there are also some limitations and potential concerns you should consider before applying. What are the eligibility requirements for the Help to Buy scheme? To qualify for the Help to Buy scheme, applicants must meet the following criteria: Be an Australian citizen over 18 years old. Earn less than $90,000 annually (individuals) or $120,000 (couples). Intend to live in the property as their principal place of residence. Not currently own or have previously owned residential property in Australia or overseas. Not using other government home ownership schemes such as the First Home Guarantee at the same time. It’s also worth noting that the scheme's places are limited, with only 10,000 spots available nationally each year. What are the property price caps by state? The Help to Buy scheme in Australia has set maximum property price caps depending on the state. Whether you’re looking to take advantage of the Help to Buy scheme in QLD or NSW, here’s a general breakdown of what you can expect: