Is a low doc loan right for me? Can a higher deposit bring down monthly costs? These are just a few of the questions you should be asking a lender when applying for a low documentation loan. Of course, some think asking a lender a dozen or so questions is crazy but it’s actually pretty smart. You educate yourself on some simple matters which means you aren’t given any nasty surprises.
So, what top questions should you ask a lender today?
What Sort of Deposit Will You Require from Me?
This is one of the most important questions to ask a lender because everyone has different requirements. For instance, most low doc home loans will require a minimum of 20% deposit. However, some lenders might want to increase that deposit amount to 40%. That is a substantial amount and something beyond your control. That’s why you need to ask this question because you can’t reach the 40% deposit amount, you need to look for another lender.
What is Your Interest Rate?
Whenever you apply for a low doc loan, you are typically going to experience a higher-than-average interest rate. That doesn’t mean you should turn away because sometimes rates can be affordable and reasonable. It comes back to the lender and your credit. Even if your credit isn’t up to par, it’s possible to get an affordable interest rate.
You do need to ask this question, however, so that you know where you stand. Higher interest rates can be manageable if the loan works for you as a whole. Low doc home loans can be the ideal fit as long as it’s affordable for you in the short and long term.
Do You Offer Fixed or Variable Interest Rates?
Another crucial question to ask is whether you get fixed or variable interest rates. While you might not think it matters, it truly does. Remember, a fixed rate of interest remains the same throughout the loan. A variable interest rate can go up and down. So, you need to know what you’re getting and think what’s best for you. A low doc loan can work as a standard loan but interest can tip the scales.
It’s the same with a standard loan, interest rates can be fixed or variable. Both have their advantages and disadvantages, so you need to think of them too. A variable interest rate is good because it can decrease during the loan period but can also increase. Sometimes, there is greater protection with a fixed rate. Of course, the choice is yours when choosing low doc home loans.
What is Likely to Be the Monthly Payment Amount?
You need to have an idea of what sort of monthly repayments you’re going to face. Depending on the amount you wish to borrow and the deposit, the payments can be varied. For instance, if you put a higher deposit down it could reduce your payments somewhat. On the other hand, a lower deposit and poor credit can push it up higher. So, you have to ask this question when looking for a low doc loan. It’s important to have an idea of payments based on your circumstances so that you can be sure it’s viable.
Get in the Know Before You Apply for a Loan
Being eligible for a loan gives you a real shot in the arm because you’re taking a leap towards owning a property. Unfortunately, many people go into this without asking any questions. Most, get a nasty surprise later too. It’s not necessary because you can ask a lender a few questions before you apply for a loan. It’s not being a pain; it’s being smart and can ensure you’re getting the right loan too. Low doc home loans aren’t scary if you ask a lender a few questions first.