A low doc home loan: Is it right for you?

If you’re a small business owner or self-employed and don’t have the required documents for a standard home loan application then a home loan that requires less documentation may be what you need. At Pepper Money we can help with our alternative documentation option.

The Alt Doc Loan, it’s good for:

  • Self-employed workers
  • People requiring alternative financial documentation to Full Doc home loans.
  • A refinancing option for small business consolidating outstanding debts. 

What's a Low Doc home loan?

A low-documentation (or Low Doc) home loan is a mortgage that can be taken out using less documentation than what is required for a full-documentation mortgage. In the past, a Low Doc home loan demanded significantly less paperwork, as well as less proof of a savings history and ability to repay the loan. However, in 2009 after the global financial crisis, changes to credit regulations meant that the requirements for lending became stricter such that Low Doc Loans became inaccessible to many people looking to borrow money.

At Pepper Money we offer what we call Alternative-documentation (Alt Doc) Loans, which comply with today’s lending standards.  Alt Doc home loans are an alternative way to make home ownership a reality for Australia’s army of self-employed workers who do not tick the usual loan application boxes.  

Who can Alt Doc Loans help?

An Alt Doc home loan can be a good mortgage solution for people in a variety of financial circumstances.

The Self-employed, small business owners, contract or seasonal workers, people who have only recently moved to Australia, people with poor credit history and, property investors.

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Our Alt Doc home loan products can also have benefits that stretch beyond just mortgages. For example, the refinancing option can help self-employed borrowers to consolidate business debt, pay outstanding tax debts or help with cash flow.

Even if you’re looking at our Alt Doc home loans it is worth noting that while they’re designed for those customers without comprehensive documentation, generally the more documents and proof of financial history you can show, the better the chance of approaching mainstream interest rates.

What do I need for an Alt Doc home loan?

We can consider a range of financial documentation for our Alt Doc home loans. For the self-employed this might include:

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  • Evidence of ABN registration for six, 12 or 24 months, depending on the loan type
  • Evidence of GST registration for six or 12 months, depending on the loan type
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Declaration of financial position with:

  • Six months of business bank statements
  • Or six months of business activity statements (BAS)
  • Or, an accountant’s letter 
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Things to remember

Alt Doc does not mean less thorough. We always complete a comprehensive assessment of each Alt Doc application, carrying out as much due diligence as when we assess Full Doc loans. Each application must satisfy our normal credit assessment, and, importantly, it must be proven that it will genuinely meet your needs. If you’re looking at taking out an Alt Doc home loan there are details to consider like, additional fees and charges, and the possibility of a shorter loan term than a mainstream mortgage.

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