‘Low doc’ loans
Low-doc or low documentation loans are structured for the self-employed who don't have the documentation required to get traditional home loans. The interest rate is higher than the standard variable rate although the gap is narrowing. Other types of non-conforming loans are also on the rise to cater for people with riskier borrowing profiles. They accordingly pay higher interest rates. Both types of low-doc loans generally carry a requirement for mortgage insurance, adding to their cost.