No Doc Mortgage
A no-doc mortgage, also known as a stated income mortgage, is a type of home loan that requires little or no documentation of income or assets from the borrower. Instead, the borrower simply states their income and assets, and the lender does not verify this information through traditional means, such as tax returns or bank statements.
No-doc mortgages were popular in the early 2000s, particularly among self-employed borrowers or those with non-traditional income sources. However, they were one of the causes of the housing market crash in 2008, as many borrowers were approved for loans they could not afford.
Since the housing market crash, regulations around mortgage lending have tightened significantly, and it is much harder to get a no-doc mortgage. Most lenders now require borrowers to provide extensive documentation of their income, assets, and debts to ensure that they can afford the loan they are applying for.
It's important to note that while a no-doc mortgage may sound appealing because it requires less documentation and may be easier to qualify for, it often comes with higher interest rates and fees to compensate for the increased risk to the lender. Additionally, if you are unable to make your mortgage payments, you could risk losing your home. It's important to carefully consider the risks and benefits of any mortgage product before making a decision.
