Funding for self-employed opens up

There are encouraging signs that self-employed products are making a return, with a non-bank lender unveiling a new lite doc product.

Yesterday, Australian First Mortgage (AFM) launched its Complete Option self-employed lite doc loan.

The Advantedge funded loan has a maximum LVR of 80 per cent (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 loans.

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

AFM’s national director of sales and marketing Iain Forbes told The Adviser that despite the decision by banks to pair back on lending to self-employed borrowers, demand for low-doc products remainsl high.

“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,” Mr Forbes said.

“Our new product opens up a great opportunity for brokers, because it is inevitable they would have quality self-employed borrowers that require a low-doc loan.

“We work for the broker and that has been our model from day one. We want to give brokers choice.”