Banks require payslips. If you are self-employed, you probably don't have them. Alt-doc lending exists to solve this problem. Here is how it works, what lenders actually accept, and what you need to prepare.
Alternative documentation lending — commonly called alt-doc — is a lending category designed for borrowers whose income cannot be verified through standard payslips or recently lodged tax returns. This category exists almost entirely because of the self-employed. It is not a subprime product. It is a documentation pathway that substitutes for the employment verification process used for salaried borrowers.
Why banks cannot serve self-employed borrowers well
Banks assess income using PAYG payslips and, for self-employed borrowers, the most recent two years of individual and business tax returns together with ATO Notices of Assessment. The problem is that tax-effective business structures — the kind most accountants recommend — minimise taxable income through depreciation, expense claims, superannuation contributions, and business distributions. A self-employed borrower with a $280,000 business cash flow may report a personal taxable income of $110,000. Banks assess borrowing capacity against the $110,000 figure.
Non-bank alt-doc lenders accept an accountant's declaration of income. The accountant certifies the borrower's actual income — including business cash flow, drawings, and distributions — on a standard declaration form. This figure is used for serviceability, not the ATO-reported figure. It is not a lie or an inflation — it is a more accurate representation of the borrower's actual economic position.
What lenders actually accept as alt-doc
- Accountant's letter or declaration: A signed statement from a registered CPA or CA certifying income for the current financial year. Must be on firm letterhead and include ASIC registration number.
- BAS statements: Last four quarters of Business Activity Statements showing GST turnover. Used to verify declared income is consistent with business revenues.
- Bank statement analysis: 6–12 months of business bank statements showing regular income deposits. Used by some lenders as a cross-check or primary verification for borrowers without accountants.
- Self-certified income (limited): A small number of specialist lenders still offer self-certification at higher rates and lower LVRs, typically for experienced investors with strong security.
Minimum requirements across the non-bank market
Most non-bank alt-doc lenders require the borrower to have held an ABN for at least 12 months. Some require 24 months. GST registration is typically required for borrowers claiming business turnover above the $75,000 threshold. The LVR ceiling for alt-doc lending is generally 70–80%, depending on the lender and the security property type. Maximum loan sizes range from $2M to $5M depending on the lender.
The quality of your accountant's declaration matters more than most borrowers realise. Vague or incomplete declarations are one of the most common reasons for alt-doc applications to stall at credit assessment.
The rate premium for alt-doc
Alt-doc products typically carry a loading of 30–80 basis points over a lender's full-doc equivalent rate. For a $1M loan, 60bps is $6,000 per year. For borrowers whose only alternative is a bank that will not lend at all — or will lend significantly less than required — this premium is typically immaterial. Refinancing to full-doc after two years of lodged tax returns is a standard outcome for alt-doc borrowers who normalise their tax position.
This article is published for general informational purposes. It does not constitute financial or credit advice. Eligibility for non-bank lending depends on individual circumstances. Speak with a qualified credit specialist for advice specific to your situation.
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