Mortgage loan options available for self employed borrowers

There are encouraging signs that self employed mortgage loan products are making a return with Australian First Mortgage (AFM) - a non-bank lender - launching its Complete Option self-employed lite doc loan last week.

The mortgage loan has a maximum LVR of 80% (LMI inclusive) and offers the refinancing of existing loans inclusive of cash out up to $10,000 to cover reasonable financing costs.

Low-doc lending was one of the first casualties of the GFC, as funders deemed the sector too risky and consequently paired back significantly on no doc and low doc mortgage loans.

Research by Genworth Financial revealed a dramatic decline in the number of low doc loans issued last year, from 24% in August 2008 to only 8% in August 2009.

And although banks have decided to pair back on lending to self-employed borrowers, demand for non conforming loans or low doc mortgage loan products still remains high.

AFM’s national director of sales and marketing Iain Forbes said “there has always been a demand. While the banks continue to tighten their funding criteria, non-banks are stepping up to the plate in a bid to cater to this demand.”