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LVR up to 75%

Loan terms from 3 month up to 36 Months

Quick access to funds

No doc/ Low doc approvals

What is a low doc 1st/2nd mortgage loan?

A low documentation (low doc) 1st/2nd mortgage loan is a type of mortgage that requires less paperwork and proof of income compared to traditional mortgage loans. These loans are designed for borrowers who may have difficulty providing standard documentation, such as tax returns, often due to being self-employed, freelancers, or having irregular income streams.

These low doc 1st/2nd mortgage loans are non-coded loans from private lenders. These loans are generally short term in nature and needs to be borrowed under an ABN backed entity.

Key difference between 1st Mortgage and 2nd Mortgage

1st Mortgage: This is the primary loan taken out on a property, secured by the property itself. It typically has the first claim on the property in the event of default. The interest rates are comparatively cheaper as compared to a 2nd mortgage loan.

2nd Mortgage: This is an additional loan taken out on a property that already has a first mortgage. The second mortgage is subordinate to the first, meaning it will only be paid after the first mortgage has been satisfied in the event of foreclosure. The interest rates are comparatively dealer as compared to a 1st mortgage loan.

Critical information sheet

Our loan guide

1st / 2nd Mortgage Loan

Loan amount

Starts from $100k

Interest rates from

1st Mortgage - From 7.99% p.a. / 2nd Mortgage – From 14.99% p.a.

Loan term

Up to 3 years

Pre-approval time

24 – 48 hours

Unconditional approval & settlement time

5-10 Business days

Repayments

Principal and Interest / Interest Only / Capitalised Interest

Security

Required with funding possibilities up to 75% Loan to Value ratio

What you need to know

Documents required

Valid identification proof

Security Details

Exit Strategy

Others depending upon loan product

Benefits

Start-ups/new businesses eligible

Can borrow higher amount loans

Bad credit history can be considered.

*The information provided in critical information sheet is intended as a guide only. Please contact us for more information.

What you should know about 1st 2nd Mortgage Loan

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Pros and Cons of 1st 2nd Mortgage Loan

Pros

Flexible Approval Criteria: Private lenders typically have more flexible approval criteria compared to traditional banks, making it easier for self-employed individuals, freelancers, or those with irregular income to secure a loan.

Faster Approval Process: The streamlined documentation requirements and less bureaucratic structure of private lenders often result in a quicker approval process, which is beneficial for borrowers needing funds promptly.

Customized Loan Terms: Private lenders may offer more personalized and negotiable loan terms tailored to the borrower’s unique financial situation and needs.

Accessibility: Borrowers with poor credit scores or those who have been denied by traditional lenders might still qualify for a low doc loan from a private lender.

Less Stringent Documentation: Private lenders might require minimal documentation, making the process simpler and less time-consuming for borrowers who cannot provide extensive financial records.

Cons

Higher Interest Rates: Due to the increased risk associated with less documentation and flexible lending criteria, private lenders often charge higher interest rates compared to traditional lenders.

Higher Fees: Private lenders may impose higher fees, including origination fees, processing fees, and other charges, making the loan more expensive overall.

Shorter Loan Terms: Loans from private lenders often have shorter terms, which can result in higher monthly payments and the need to refinance sooner.

Potential for Predatory Practices: The less regulated nature of private lending can expose borrowers to predatory practices, including exorbitant fees, unfavourable loan terms, and aggressive foreclosure policies.

Risk of Foreclosure: As with any secured loan, defaulting on a mortgage from a private lender can result in the loss of your property. Private lenders might have more aggressive foreclosure policies compared to traditional banks.

Less Consumer Protection: Private lenders are typically subject to fewer regulations and oversight, which can result in less consumer protection. Borrowers need to be diligent in understanding the terms and conditions of the loan.

Is it possible to use a residential property as collateral for a business loan?

Certainly, you can use a residential property as security for a business loan. This can be an effective way to secure financing, particularly if you have substantial equity in your home and are struggling to obtain a business loan through traditional means. 

Key Considerations

Lenders will typically look at the amount of equity you have in your residential property. The more equity you have, the better the chances of securing a loan.

Lenders often have specific LVR ratios they adhere to. For example, they may lend up to 75% of the property's value, considering existing mortgages.

Using residential property as collateral might result in lower interest rates compared to unsecured business loans, but it's crucial to understand the terms and conditions.

Have a lawyer review the loan agreement to ensure all terms are clear and fair. Ensure you understand all clauses and implications.

Exit strategy is very crucial given the short-term nature of this loan product. Plan how you will repay the loan, especially if it’s a capitalised interest or Interest only loan and includes a bullet payment at the end of the term. Consider your ability to refinance or sell the property if needed.

While private lenders can offer more flexible financing options, especially for those who struggle to meet traditional documentation requirements, they come with significant risks. It’s crucial to thoroughly evaluate all aspects of the loan and the lender to ensure it aligns with your financial situation and long-term goals. Always seek professional advice before committing to a private mortgage loan.

Reasons to consider 1st/2nd mortgages

Low documentation (low doc) 1st/2nd mortgages can be advantageous for certain borrowers despite their potential risks.

 Here are several reasons to consider these types of loans:

  • Buying/investing into new business
  • Debt consolidations
  • Developing properties
  • Disposing residual stocks
  • Paying ATO dues
  • Other working capital needs for Business

How do I apply for a 1st/2nd mortgage loan?

1. Submit Application

First step is to simply fill out the application form with the required information and loan request.

2. Get Indicative Quote

Once the application is received, our lending specialist would get an indicative quote within 24-48 hours.

3. Letter of Offer (LOO)

Once we receive the mandate to proceed basis indicative quote, we get a formal letter of offer from the lender.

4. Valuation and Legal Docs

On receipt of signed LOO, the lender would initiate valuation and get loan docs prepared.

5. Disbursement

Once we receive the mandate to proceed basis indicative quote, we get a formal letter of offer from the lender.

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Why should you choose Broc Finance?

Tailor made options

Being a small business owner, many of our clients are not sure of right loan product for their businesses. Our lending specialists understand their needs and recommend tailor made options.

Personal Consultation

Unlike business loan marketplace websites which use AI based algorithms to match your requirements, we provide obligation free personal consultation as every business is different and an AI based algorithm may not provide them the optimum solution.

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Competitive Pricing

We endeavour to achieve the optimum business loan solution for our clients at the most competitive pricing possible.

Clear communication

We understand the essence of time so don’t believe in wasting our customers time by giving false hopes. Transparent and clear communication is in our DNA.

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A Trusted Partner in Commercial Finance I had the pleasure to discuss with Broc Finance on a complex commercial mortgage transaction, and I can confidently say they are the experts and professinals in this space. If you're looking for a commercial mortgage broker who brings clarity, integrity, and genuine commitment to the table, Broc Finance is the one to call. Highly recommended for any business owner seeking tailored financial solutions.
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Frequently asked questions

To qualify for a low doc mortgage loan, the borrower must be an ABN backed entity. Low doc mortgages are typically aimed at

  • Self-employed businesses
  • Borrowers with irregular income streams
  • Borrowers who have substantial equity in their property but cannot provide traditional income verification

While the specific requirements can vary by lender, typical documentation might include:

  • A letter from an accountant verifying income
  • Recent bank statements
  • Proof of asset ownership
  • Rates Notice
  • Identification documents

Yes, low doc mortgage loans can be used for investment properties, particularly beneficial for investors who might not have regular income but have significant assets and equity. However, the same needs to be borrowed under an ABN backed entity.

Interest rates on low doc loans are generally higher than those on traditional loans due to the increased risk to the lender from the reduced documentation and verification of income.

Yes, refinancing a low doc mortgage loan is possible and can be a good exit strategy if your financial situation improves or if you find better terms elsewhere. However, refinancing may come with its own set of fees and requirements.

(keeping in mind that each lender will have different requirements).

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