Big banks play catch up over low doc loans
Big banks are now willing to provide low documentation loans in which borrowers don't need as many documents to apply for a loan. Rather than provide pay slips or tax returns, a borrower can simply state what their income is, in a process called self-verification. The banks expect the low doc loans will appeal to self-employed people, and may not waive the usual checks on income for those with a regular job. Some observers wonder whether borrowers are as frank in their tax return as they are with the bank. The Australian Taxation Office is conducting a pilot review of businesses that use low-doc loans in an attempt to reconcile their tax records with loan repayments.